I guess what I am trying to say is this, I know some people want higher rates, but the rates will always be just high enough to get you to offer the swap and no higher. That is not our policy, it is simply the way markets work. Markets try to find the most efficient price, and that is the price where the offerers are offering at, by definition, the lowest price. So, I personally think that a lot of the rage against the FRR is really a rage against competition in a market, and although we are obviously working to make a better tool, I think that no matter what we do, basic market competition is something no one can escape.
The problem with the FRR is NOT that lenders aren't getting paid enough. It's the fact that
it renders swap rate useless as a market signalling mechanism. If swap rates are prevented from rising, there's nothing to draw in more lenders to make more offers. Potential lenders don't know that more funds are needed until the offer book is practically empty.