LIBOR term is used for :
Deposit rate applicable to interbank loans in London
LIBOR stands for the London Interbank Offered Rate. It is the average rate at which leading banks in London were willing to lend unsecured funds to one another in the wholesale interbank market.
It was published daily for several currencies (US dollar, pound sterling, euro, yen, Swiss franc) and maturities ranging from overnight to twelve months, and it served as the reference rate for floating-rate loans, bonds, derivatives and mortgages worldwide.
So LIBOR is essentially a rate applicable to interbank loans in London, quoted as the rate at which banks offer deposits to other banks. It is not a general deposit rate of the European market, nor a rate specific to the Eurobond market, and the Eurocurrency market as a whole has many rates, of which LIBOR is only the London interbank benchmark.
After manipulation scandals, LIBOR was phased out and replaced by risk-free reference rates such as SOFR (USA) and SONIA (UK); in India, MIBOR plays the analogous interbank role.
Hence, Deposit rate applicable to interbank loans in London.
Similar Questions
Assertion (A) : A well developed money market is the basis for an effective monetary policy. It is in the money market that the Central Bank comes into contact with the financial sectors of the economy as a whole and it is through the liquidity in the market that influence the cost and availability of credit.
Reasoning (R) : A well organised money market is an essential condition for the successful operation of the Central Banking policies, and for holding the conditions of liquidity within the bounds of what the monetary authorities consider desirable.
What is Call Money ?
Identify the incorrect statement(s), regarding money market, among the following :
(a) The call money market deals in short term finance repayable on demand, with a maturity period varying from one day to 14 days.
(b) Treasury bills are instruments of short-term borrowing by the Government of India, issued as promissory notes under discount.
(c) A reduction in the repo rate helps banks to get money at a cheaper rate.
(d) Money market mutual funds invest money in specifically, high-quality and very short maturity-based money market instruments.
Codes :
Important Questions from Money Market
The interest rate at which the Reserve Bank absorbs liquidity from banks under the Liquidity Adjustment Facility (LAF), on an overnight basis, against the collateral of eligible government securities, is called _____.
When the general interest rate reaches a very low level, which of the following statements will be correct?
Which of the following statements are true in context of efficient market?
A. Equilibrium rates of return will prevail
B. Investor cannot earn a positive return
C. Volatility will be very high
D. Securities of listed firms sell at their fair values
E. Investors are generally risk-averse
Choose the most appropriate answer from the options given below:
The words 'Bulls and Bears' are associated with
In economics dictionary, what is the full form of NSDL?
