The Federal Reserve Bank of New York revealed Friday it learned as early as 2007 that Barclays, the giant British bank, underreported data about its borrowing costs, a practice that would have altered how a global benchmark for interest rates was set.

The New York Fed, in response to a request from a U.S. Congressional committee, disclosed that a Barclays employee explained to one of its staff members in April 2008 that “Barclays was underreporting its rate to avoid the stigma associated with being an outlier with respect to its LIBOR submissions, relative to other participating banks.”

It’s estimated that LIBOR, the London interbank offered rate, is used as a reference rate for loans, mortgages and other financial contracts worth more than $800 trillion US around the globe, including Canada.

That’s $116,000 for every person in the world.

LIBOR is set each business day based on submissions from 16 large banks, including Barclays, that represent an average of their estimated borrowing costs, and is calculated for several major currencies by the British Bankers’ Association.

The disclosure came at the same time as the self-regulatory body for Canada’s investment dealers, the Investment Industry Regulatory Organization of Canada, said it was reviewing how the Canadian version of LIBOR, or CDOR, was set.

CDOR, the Canadian Dealer Offered Rate, is set each business day based on a survey of borrowing rates among major Canadian banks.

“While we are not aware of concerns at this time with the setting of CDOR, recent experiences with LIBOR point to a need for increased scrutiny of such survey-based reference rates and IIROC is conducting a review of current practices among CDOR survey participants,” said Lucy Becker, IIROC vice president, said in a statement.

Other banks said to underreport estimates

“The Barclays employee also stated that in his opinion other participating banks were also under-reporting their LIBOR submissions,” the New York Fed said in a statement on its website.

It also said that as the financial crisis deepened in late April and into May 2008, U.S. Treasury Secretary Timothy Geithner, who was then head of the New York Fed, pressed the BBA to reform the process on how LIBOR is set.

Barclays has been fined $453 million US by U.S. and British agencies for feeding false data which went into calculations of LIBOR.

The New York Fed’s statement raises questions about whether the British authorities realized there was cheating and failed to act to end it.

Last week, Britain's Serious Fraud Office said it had opened a criminal investigation into whether LIBOR had been manipulated and the U.S. Justice Department has said its investigation is continuing.

In February, Canada’s Competition Bureau said it had gone to court for an order to force banks to disclose information related to its investigation, which was prompted by a Canadian bank that had sought immunity from prosecution.

The Bureau did not identify the bank. In the wake of the fines, Diamond resigned and Barclays Chairman Marcus Agius announced that he would go as soon as his successor was chosen.

Barclays has said that individual traders — Diamond said it was 14 — sought to manipulate the LIBOR to protect their own positions at various times between 2005 and 2009.

The bank has admitted that it also submitted false lower rates at times in 2007 and 2008 to discourage speculation that it was in trouble and thus had to pay more to borrow money from other banks.

With files from The Associated Press