The first BBA LIBOR fixings since December 12 th’s central bank interventions shows banks are borrowing money from each other at lower rates. The real rates of interest being used by the UKs banks to borrow from each other have fallen, demonstrating the City has welcomed the united action by the worlds major central banks to make borrowing easier. December 13 th's  falls in the BBA LIBOR rates for overnight, one month and three month borrowing in sterling, euro and US dollars are:

Overnight Sterling from 5.685 to 5.60875
1 month Sterling from 6.74625 to 6.60375
3 month Sterling from 6.62688 to 6.51375
Overnight Euro from 4.055 to 4.04625
1 month Euro from 4.945 to 4.935
3 month Euro from 4.9525 to 4.94938

Overnight US dollars from 4.34 to 4.30
1 month US dollars from 5.1025 to 5.0275
3 month US dollars from 5.0575 to 4.99063

The fact that central banks seem willing to engage to address the stress in the credit markets, and that the Bank of England in particular has widened its pool of acceptable collateral, has been seen by the markets as constructive in the opinion of British Banker’s Association. The central banks have also left themselves some welcome latitude to inject further liquidity over the next few weeks.

London, UK , December 13 th, 2007


Source: British Banker’s Association, London, UK, WWW.BBA.ORG.UK

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