FEW people had any idea what Libor, the London interbank offered rate, was until until the financial collapse forced a greater interest in the working of banks.
FEW people had any idea what Libor, the London interbank offered rate, was until until the financial collapse forced a greater interest in the working of banks.
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Yet the obscure process is the crucial mechanism used used to set interest rates for mortgages, loans and savings and is the benchmark for an estimated £222 trillion of worldwide financial contracts.
Five years ago a sharp rise in Libor provided an early warning of the downturn as banks started to charge each other more to borrow money. Inevitably, the banks protect their profit margins by increasing the cost to the millions of borrowers now facing rising mortgage rates. With the revelations that Barclays attempted to manipulate the global rate, they now know that their extra payments are the result of illegal fixing of the rate by bank traders who effectively lied about what it was costing the bank to borrow money.
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Can banks' stock sink any lower?
FEW people had any idea what Libor, the London interbank offered rate, was until until the financial collapse forced a greater interest in the working of banks.
Yet the obscure process is the crucial mechanism used used to set interest rates for mortgages, loans and savings and is the benchmark for an estimated £222 trillion of worldwide financial contracts.
Five years ago a sharp rise in Libor provided an early warning of the downturn as banks started to charge each other more to borrow money. Inevitably, the banks protect their profit margins by increasing the cost to the millions of borrowers now facing rising mortgage rates. With the revelations that Barclays attempted to manipulate the global rate, they now know that their extra payments are the result of illegal fixing of the rate by bank traders who effectively lied about what it was costing the bank to borrow money.
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We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis. If you're a relatively new user then your comments will be reviewed before publication and if we know you well then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules, which are available here.
Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.
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