SOME FACTS ABOUT LIBOR
THE LIBOR RATE IS calculated every business day in 10 currencies and 15 terms, ranging from overnight to one year. Rates on around US$10 trillion in corporate loans, mortgages, home equity lines of credit and student loans worldwide are pegged to Libor, usually with a mark-up of several percentage points. The total amount of finance contracts tied to Libor exceeds $300 trillion – that’s $45 000 for every person in the world.
Libor has pushed up rates on adjustable mortgages as well as rates on many commercial loans and has blunted the effectiveness of the recent interest rate cuts by the world’s central banks. It also means that consumers and businesses can find their access to credit severely restricted. That will dampen economic growth.