The British Bankers Association on Friday have backed away from making changes to the London interbank offered rate and throwing the markets into further turmoil.

The association said the oversight of Libor would be strengthened but the composition of the bank panels that contribute to compilation of the rate were left unchanged according to the NY Times Dealbook. Trading desks everywhere breath a sigh of relief.

Each morning the member banks of the association quote rates for 15 different periods ranging from overnight to one year in multiple currencies. They take an average of the rates and publishes them before noon in London. The reason for the worry over reliability started in the summer of 2007 as the credit crisis was emerging on everyone's radar.

Libor gained attention last August as banks suddenly became wary of lending to each other because of mounting losses linked to U.S. subprime mortgages. Three-month Libor soared to 2.40 percentage points above yields on U.S. Treasury bills on Aug. 20, the widest margin since December 1987 and up from 0.39 percentage point a month earlier. The figure was 0.79 percentage point as of 4:30 p.m. in London on Friday.

It would have been very messy indeed if Libor rates which are used to calculate rates on at least $500 trillion of securities were to be overhauled.