Regulators and politicians across both sides of the Atlantic are continuing in their quest to overhaul the current Libor rate-setting system, which has been deemed no longer a “viable option”.

Libor, or the London interbank lending rate, is a benchmark interest rate for around $800 trillion of financial contracts around the world and is one of the most crucial interest rates in finance.

Last week, seven banks—Barclays, Citigroup, Deutsche Bank, HSBC, JPMorgan, Royal Bank of Scotland and UBS—received subpoenas from the attorney generals of New York and Connecticut and are to be probed over alleged manipulation of the Libor rate.

Ever since Barclays was hit with a record fine of $451 million from regulators in the U.K. and U.S. on June 27 after Britain’s second biggest bank admitted to manipulating Libor from 2005-2009 to the benefit of its derivative positions as well as by a desire to make the bank look stronger during the financial crisis, calls for changes to the rate-setting system have grown. Barclays is the only institution so far to admit to any wrongdoing.

Late last month, the U.K. government set up a review that is being conducted by Martin Wheatley, a top official at U.K. regulator the Financial Services Authority (FSA), and it is looking into how Libor is calculated and regulated. An initial discussion paper has said that a dramatic overhaul of the key benchmark borrowing rate is needed.

“Retaining Libor unchanged in its current state is not a viable option, given the scale of identified weaknesses and the loss of credibility that it has suffered,” said the initial discussion paper. “Therefore, Libor has to be significantly strengthened to take account of these weaknesses, while, in parallel, alternative benchmarks that can take on some or all of the roles that Libor currently performs in the market should be identified and evaluated.”

The paper suggests that alternative benchmarks could be used more widely instead of Libor, but this “would require a carefully planned and managed transition, in order to limit disruption to the huge volume of outstanding contracts that reference Libor”.

Wheatley is looking into scrapping Libor altogether and replacing it with a borrowing rate based on actual trades, which could be overseen by a new independent body rather than the British Bankers’ Association (BBA), a trade association for the U.K. banking and financial services sector. The FSA official also wants to strengthen sanctions to tackle Libor abuse.

“It is clear that regardless of the outcome of ongoing international investigations, trust in a vital part of the financial system has been badly damaged and timely action is needed to restore it,” said Wheatley.

Meanwhile, U.K. politicians on the Treasury Select Committee today published their findings into the Barclays Libor scandal.

Among its conclusions, the parliament report urged the Wheatley review to recommend a “more reliable Libor setting process to carry credibility” which should include how such systems work during times of financial crisis, when there may be little or no interbank lending taking place, and how the authorities should respond to signs of dysfunction. It also suggested that a trade association may not be the most “appropriate body to perform that role”. The Treasury Select Committee also wants to see the law amended to widen the meaning of market abuse to include manipulation, or attempted manipulation, of the Libor rate and other survey rates, as well as widening the definition of a criminal offense in such matters.

“The sustained rigging of a crucial benchmark rate has done great damage to the U.K.’s reputation,” said Andrew Tyrie, a Conservative MP and chairman of the Treasury Select Committee.

“Public trust in banks is at an all time low. Urgent improvements, both to the way banks are run, and the way they are regulated, is needed if public and market confidence is to be restored.”

The BBA responded to the Treasury Select Committee’s initial findings, saying the report was a “significant contribution to the work the British Bankers’ Association and the regulatory authorities have been undertaking to ensure the integrity of the [Libor] benchmark”.

“The BBA is providing the research and findings from its current review to the Wheatley review and is engaging constructively with the Parliamentary Commission on Banking,” it said in a statement. “The absolute priority of everyone involved in this process is to ensure the provision of a reliable benchmark which has the confidence and support of all users, contributors and global regulators.”

The Wheatley review is not considering any issues relating to the actions or alleged actions of specific financial institutions in attempting to manipulate Libor or other benchmark rates. These issues will continue to be investigated by the FSA and other regulators around the world, with possible criminal sanctions for the individuals involved. Wheatley aims to publish final recommendations for regulating and improving Libor and similar rates by the end of September.

Libor is a notional rate set by a 16-bank panel based in London. Members of the panel of international banks are all asked how much it would cost to borrow from one and other and the rate is then calculated and published daily by market data vendor Thomson Reuters on behalf of the BBA, covering a variety of currencies and time durations.