The paper sets out initial proposals for reforming the current framework for setting and governing LIBOR.
Wheatley is asking for feedback from all stakeholders over a four week period and has set out initial analysis the role that LIBOR will play in financial markets; the flaws in the current structure of setting LIBOR, its governance and oversight; and a range of options for reform, including the issue of transition.
Wheatley said: "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 repair it.
“Today, we are taking the first step in this process by launching the Wheatley Review discussion paper, which seeks responses from a wide range of market experts and international stakeholders.
“This review aims to ensure that LIBOR is reformed in whichever way fully restores credibility and trust."
Mark Hoban, Financial Secretary to the Treasury, said: "This discussion paper demonstrates that we will give regulators the powers they need to prevent the manipulation of key benchmark rates in the future.
“This review will report by the end of the summer in time for any necessary changes to be taken forward in legislation.
“The Government is also working with its international partners to inform the international work in this area and work towards a globally consistent solution."
And Peter Vicary-Smith, Which? chief executive, said: "We welcome today's proposals that LIBOR rate setting should be overseen by a properly independent and accountable body and that there should be criminal sanctions for rate manipulation.
“The Government and regulator must now thoroughly investigate the impact of LIBOR rate-rigging on ordinary borrowers and savers, and introduce a collective redress system to properly compensate consumers if they have lost out.
"Mr Wheatley has said it's vital to rebuild trust in the Libor setting process, but the bigger job is to rebuild trust in banking that has been shattered by one scandal after another.
“That's why the parliamentary banking inquiry must produce recommendations for fundamental change to the culture and practices of the banks, and put the best interest of consumers at the centre of reforms."
