Inter-Bank Borrowing Rates Climb To Record
Before its even been passed by the House, a growing feeling that the U.S. government's $700 billion financial-rescue package will fail to revive confidence among banks, is circulating the globe.
The euro interbank offered rate, or Euribor, that banks charge each other for three-month loans increased to an all-time high of 5.34 percent today and the Libor-OIS spread, a gauge of cash scarcity among banks, widened to a record.
The world's financial institutions are refusing to offer each other loans for any longer than a day even as central banks pump record amounts of cash into money markets.
The Libor-OIS spread, the difference between the three- month dollar rate and the overnight indexed swap rate, climbed to 273 basis points today. It's the third consecutive day the spread has risen to an all-time high. The average was 8 basis points in the 12 months to July 31, 2007, before the credit squeeze began.
The euro interbank offered rate, or Euribor, that banks charge each other for three-month loans increased to an all-time high of 5.34 percent today and the Libor-OIS spread, a gauge of cash scarcity among banks, widened to a record.
The world's financial institutions are refusing to offer each other loans for any longer than a day even as central banks pump record amounts of cash into money markets.
The Libor-OIS spread, the difference between the three- month dollar rate and the overnight indexed swap rate, climbed to 273 basis points today. It's the third consecutive day the spread has risen to an all-time high. The average was 8 basis points in the 12 months to July 31, 2007, before the credit squeeze began.
