The term LIBOR Explained

There are lots of terms used in and around the money markets that won't make sense unless you happen to have come across them before.

One of these acronyms that is used is called LIBOR.

This stands for the London Interbank Offered Rate. It is a key reference interest rate, showing the lending rate between the different UK Banks.

Historically it has also been used to reference other internationally traded currencies, though in recent years the Euro is starting to influence things and the equivalent, called Euribor, is starting to get more prevalence.

The LIBOR rates are fixed at 11am London time each day. It is calculated based on the sixteen major banks in the Euro market in London, and the top and bottom ones are removed with the rest averaged to find out what the LIBOR rate is at that time.

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