When you want a loan, we need a base value to compare things to. At an oversimplified level your mortgage, car loan, or credit card rate is basically LIBOR + X, where X is how risky you are. That is how almost all of the world’s debt yields are priced, by a rate sheet baselined to LIBOR.
LIBOR is the London interbank overnight rate. It is determined by a series of banks who report their borrowing costs to a committee that determines a reasonable value based on those inputs. It’s not an exact science. But it used to be somewhat objective and above the fray of political or private interests.
Without LIBOR or something like it, we cannot guarantee that loan rates are fairly determined. It becomes impossible for consumers, creditors, or regulators to operate credit markets. Rates become fantasies, intuitions, abusive outputs that benefit those that set the rates and their agendas. There is no standard for rates anymore, which in part explains why banks aren’t lending at all.
Without this manipulation, rates would have certainly been higher in 2008 on, when banks refused to lend to each other because of the Lehman Brothers and Bear Stearns collapses. Barclays, the BOE, and other actors appear to have lied actively to the markets to create a false calm. The cost of this false calm is that we have broken the world’s credit markets to serve short-term political goals.