What is LIBOR?

The London Inter-Bank Offered Rate (LIBOR) is a daily benchmark interest rate which is calculated by averaging the rates at which panel banks would obtain wholesale unsecured funding.

LIBOR rates are published on each London business day after submissions made by panel banks to the administrator, the Inter-Continental Exchange Benchmark Administration (IBA), and are available in five currencies (British pound Sterling, Euro, US dollar, Swiss Franc and Japanese Yen) and range from overnight to 12 months.

LIBOR is currently used to set the rates for more than 350 trillions of dollars (more than 13 times the GDP of China in 2021) in various financial products such as derivatives, bonds, loans, deposits, structured products, mortgages.

Certain currencies also use specific benchmarks such as EURIBOR and EONIA for EUR or the Tokyo Interbank Offered Rate (TIBOR) for JPY.