QUOTE AND NEWS
guardian.co.uk  8 hrs ago  Comment 
Michael Bagguley, a prosecution witness in the trial of five former Barclays traders, denied any involvment in or knowledge of rate rigging Senior Barclays executive Michael Bagguley told a London court that he had never sought to influence Libor...
Financial Times  Apr 26  Comment 
Libor trial witness says he had no idea traders were allegedly making requests of Libor submitters
guardian.co.uk  Apr 18  Comment 
Former BBA director John Ewan tells trial of five men that he took word of senior Barclays employee at ‘face value’ The man in formerly in charge of overseeing the Libor benchmark lending rate took banks at “face value” when they said it...
Clusterstock  Apr 17  Comment 
Former RBS Libor submitter Paul White was banned from "any regulated financial activity" by the UK's markets watchdog for attempting to manipulate the Libor rate to benefit traders. White avoided being slapped with a £250,000 ($358,000) fine on...
Mondo Visione  Apr 14  Comment 
The Financial Conduct Authority (FCA) has today published a Decision Notice in respect of Mr Arif Hussein, formerly a derivatives trader at UBS in London. This sets out the FCA’s finding that Mr Hussein is not a fit and proper person and its...
New York Times  Apr 12  Comment 
Paul White is the fourth person to be suspended by the Financial Conduct Authority over misconduct related to the benchmark interest rate.
guardian.co.uk  Apr 12  Comment 
Financial Times  Apr 11  Comment 
Lessons from Libor can be applied to other critical daily operations, says Rosa Abrantes-Metz
guardian.co.uk  Apr 8  Comment 
Court told Jonathan Mathew did not know his actions were wrong and he did not benefit – ‘the most he got was an Itsu box and a latte’ A former Barclays bank employee accused of manipulating Libor interest rates did only what he was told to...
Financial Times  Apr 7  Comment 
Trader on trial for manipulating rate says superiors were aware of practice
guardian.co.uk  Apr 7  Comment 
Jay Merchant, one of five men accused of conspiracy to rig rates, says practice was approved by bank bosses, court hears A former trader at Barclays, one of five on trial on charges of conspiracy to manipulate financial benchmark interest rates,...




 
TOP CONTRIBUTORS

The graph to the left is for the 3 month LIBOR.

LIBOR, or the London Interbank Offered Rate, is the average interest rate between banks in the London interbank market. LIBOR is a widely used short-term interest rate benchmark since it is designed to reflect the cost of borrowing between some of the world's largest, most reputable banks.

What is LIBOR?

There isn't just one LIBOR; there are numerous rates determined by two variables:

Every business day at just after 11:00 am London time, the British Bankers' Association, in conjunction with Reuters, releases new rates for each combination of these.[3] For example, there's a new 3-month LIBOR for the yen, overnight LIBOR for the euro, and 2-week LIBOR for the pound released daily. These rates indicate both the health of the currencies (and their respective economies) relative to one another and expectations about future economic conditions.

There are ten LIBOR panels, one for each of the ten currencies for which the rate is determined. Each panel is composed of at least eight contributor banks, chosen for their reputations and their perceived expertise in a given currency. The BBA takes the daily deposit rates reported by its designated contributor banks and calculates the mean of the middle 50%; the resulting number is the LIBOR for the currency in question.[4] The average rates at which these banks say they would lend to one another is taken as an indication of the health of the banking systems of the ten LIBOR currencies. A list of the panels and their members as of May 30, 2008, can be found here on the British Bankers' Association's website.

Why is LIBOR important?

Not only does LIBOR provide information about the cost of borrowing in different currencies, it actually influences it. LIBOR is used as the basis for other interest rates across the globe. IE, variable interest rate loans such as mortgages and car loans will often be quotes at LIBOR + a percentage. For example, a loan that was LIBOR + 5% would charge 10% interest when the LIBOR is 5%, and 7% when the LIBOR is 2%.

Estimates for the total value of financial products with rates tied to LIBOR vary widely, from as low as $150 trillion,[5] to $360 trillion, [6]to as high as $500 trillion.[7]

LIBOR impacts financial instruments and products including:

Additionally, the difference between the libor rate and the interest rate on treasury bills is a key marker of the financial health of banks. For more information, see TED Spread.

Criticism

On May 29, 2008, the Wall Street Journal reported that certain banks had been reporting lower rates to the BBA than what WSJ analysis suggested they should have been.[8] Given the trillions of dollars tied to the LIBOR, even a small inaccuracy in either direction can cost lenders, borrowers, companies, or even whole economies billions of dollars. The WSJ study estimated that, if true, the artificially low U.S. dollar LIBOR saved U.S. borrowers about $45 billion over the first four months of 2008.[9] The banks, however, denied this claim and stuck by the rates they'd reported to the BBA and Reuters.

Charts





References

  1. British Bankers' Association - BBA LIBOR Panels
  2. BBA - Historic LIBOR Rates
  3. BBA LIBOR Frequently Asked Questions, British Bankers' Association.
  4. London Interbank Offered Rate - Wikipedia
  5. Yanked from Obscurity: Why Finance Experts Are Rethinking LIBOR - Knowledge@Wharton
  6. We are the World: We are LIBOR - LIBORATED.com
  7. Bankers Cast Doubt On Key Rate Amid Crisis - WSJ.com
  8. Study Casts Doubt on Key Rate - WSJ.com
  9. Study Casts Doubt on Key Rate - WSJ.com
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