LIBOR

LIBOR stands for London Inter-Bank Offer Rate; it is a global reference rate for short-term interest rates involved in interbank transactions. It is used for fixing currency rate swaps, mortgages and interest rate swaps. LIBOR was officially launched by the British Bankers’ Association (BBA) on January 1, 1986. It was regulated by the BBA until February 1, 2014. After the LIBOR scandal during the financial crisis of 2008, the Intercontinental Exchange Benchmark Administration replaced the BBA. LIBOR was then renamed as ICE-LIBOR. ICE-LIBOR rates are calculated for 5 currencies (Euro, Swiss franc, Pound Sterling, US dollar and Japanese yen) and 7 maturities. On every business day, interest rate quotations are collected from 18 major London based global banks and then their arithmetic mean is calculated after eliminating the four highest and four lowest rates. 35 LIBOR rates are published on every business day.