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What is LIBOR?

LIBOR stands for the London Inter Bank Offered Rate, or the rate of interest that a specific group of banks in London will pay on U.S. dollar deposits for a specified period of time (e.g., 3 or 6 months). It’s essentially an interest rate on foreign currency.

It is similar to the Bank of Canada rate (the “overnight” rate), or the U.S. Federal Reserve rate, in the sense that it is used as a reference rate for other short term interest rates. The fixing of the LIBOR rate by the British Bankers’ Association (BBA) began in the early 1980s. Today, more than 20 per cent of all international bank lending and over 30 per cent of all foreign exchange transactions take place in London. LIBOR is published on more than 300,000 screens around the world, including major information sources like Reuters, Bloomberg, and Thomson Financial.* For more on LIBOR and interest rates, visit the following sites: