The London Interbank Offered Rate (LIBOR) is the reference rate at which large banks indicate that they can borrow short-term wholesale funds from one another on an unsecured basis in the interbank market.
LIBOR serves two primary purposes in modern markets as:
LIBOR serves as the primary reference rate for short-term floating rate financial contracts like swaps and futures
The British Bankers’ Association (BBA), a private trade association, constructs LIBOR, and Thomson Reuters publishes it worldwide.
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