Euro LIBOR

Euro LIBOR is the interest rate that banks give to each other in the short run. If one bank has too much cash on its hands and doesn’t want to waste it by just letting it sit there, and another bank needs more reserves to meet legal reserve requirements...well...that’s a match made in bank-heaven. Banks will give each other large loans for short time periods using the Euro LIBOR rate, which...as you guessed…is in euros.

The LIBOR in Euro LIBOR stands for London Interbank Offer Rate. Besides being an interbank reference rate, it’s also used by banks making loans to people for mortgages, credit cards, and even student loans. The Euro LIBOR is the most widely used reference interest rate in the world. Yep, even in the US.