UK regulators and global banks are discussing a potentially far-reaching overhaul of the calculation and regulation of interbank lending rates, amid claims that the benchmark for $350tn contracts worldwide may have been subject to manipulation.

The review comes as regulators in North America, Europe and Japan have expanded their year-long probes into alleged manipulation of the London Interbank Offered Rates, and other benchmark lending rates, which help set the price of financial products, including mortgages and credit cards.

The Libor rate-setting process is not considered a regulated activity under the UK Financial Services and Markets Act, but US and European banks and interdealer brokers have suspended or fired more than a dozen traders in recent months following allegations of abuse.

The British Bankers' Association, which sponsors Libor, and many of the banks that help set it met Treasury officials, the Bank of England and the Financial Services Authority on Monday to kick off the review process. The rethink will take into account regulatory changes such as the planned imposition of new global bank liquidity requirements in 2015.

The BBA said in a statement: "As part of the normal reviewing processes of Libor, a number of contributing banks met today to consider future regulatory and market developments, such as the incoming liquidity rules, relevant to the parameters that Libor measure."

It added that "a technical discussion with interested groups including users of the rate will commence shortly", and promised to keep the market and government officials updated.

People familiar with what was discussed in the meeting said the review could encompass everything from revamping the way Libor rates are set to imposing new regulatory oversight and compliance requirements on participating banks.

Industry participants did much of the talking, discussing market concerns about the rate-setting process and making suggestions on how to improve it. The FSA, Bank and Treasury representatives did not make clear what approaches they favoured.

Libor is set daily under the auspices of the BBA in 10 currencies. Panels of banks submit estimates of their unsecured borrowing costs over 15 different time periods to Thomson Reuters, and these are used to calculate the daily rate.

Oversight of the process is managed by the Foreign Exchange and Money Markets Committee, which is independent of the BBA and chaired by a representative of a panel bank that submits rates in at least three currencies. Thomson Reuters is responsible for looking into any outlying rates but does not make public its investigations – or any reports to the oversight committee.