LIBOR

LIBOR stands for the London Interbank Offered Rate. It is what banks charge each other for mainly overnight and other very short term loans. A rise in the interest rate, which is used as an index worldwide, shows there is a problem.

When banks raise their interest rates that are charged other banks. it shows a fear in the market. This fear denotes the chance of not getting their money back, which is why they raise the rate.

When rates are raised it means there is more risk involved in making a loan. There are many factors in an economy that can cause apprehension among banks.

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