London Interbank Offered Rate (LIBOR)

Posted on August 5, 2022 by admin1 1467

In News

(LIBOR) rose for the fourth straight session, rising roughly 2.5 basis points to 2.83229%, the highest since November 2008.

What Is London Interbank Offered Rate (LIBOR)?

It is a benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans.
It serves as a globally accepted key benchmark interest rate that indicates borrowing costs between banks.
Administered by
- the Intercontinental Exchange, which asks major global banks how much they would charge other banks for short-term loans.
Calculation of rate
- The rate is calculated using the Waterfall Methodology, a standardised, transaction-based, data-driven, layered method.
Replacement
- It has been subject to manipulation, scandal, and methodological critique, making it less credible today as a benchmark rate.
- It is being replaced by the Secured Overnight Financing Rate (SOFR) on June 30, 2023, with phase-out of its use beginning after 2021.

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