The London Interbank Offered Rate (LIBOR) is one of a number of Interbank Offered Rates (IBORs) that are widely used in the global financial markets.
It’s used as a key interest rate benchmark across a number of derivatives, bonds, loans, securitisations, deposits and other products, as well as for banks' and other financial institutions own funding and capital needs.
LIBOR is calculated and published daily across five currencies (GBP, USD, EUR, JPY and CHF) and seven maturities (overnight, one week, and 1, 2, 3, 6 and 12 months) by the Intercontinental Exchange Benchmark Administrator (ICE BA). It’s based on submissions by a panel of banks using available transaction data and their expert judgement.
LIBOR should provide an indication of the average rate at which each LIBOR contributor can borrow unsecured funds in the London interbank market for a given period, in a given currency.
This average is published and used by the financial markets.
"The absence of active underlying markets raises a serious question about the sustainability of the LIBOR benchmarks that are based upon these markets… the planning and transition must now begin."
Andrew Bailey, Chief Executive Officer, Financial Conduct Authority