LIBID

LIBID stands for London Interbank Bid Rate. It is the interest rate at which banks can borrow funds from other banks in the London interbank market. LIBID is used as a benchmark for short-term interest rates and is often used to set interest rates on loans and other financial instruments. It is also used as a reference rate for some financial derivatives. The rate is determined by a survey of a panel of banks conducted by the British Bankers' Association (BBA).

LIBID importance

LIBID is important to banks for several reasons:

1. It serves as a benchmark for short-term interest rates: Banks use LIBID to set the interest rates on loans and other financial instruments, such as mortgages, credit card balances, and short-term corporate loans.
2. It is used as a reference rate for derivatives: Many financial derivatives, such as interest rate swaps and futures, are based on LIBID, so changes in the rate can have a significant impact on the value of these instruments.
3. It indicates the health of the interbank market: LIBID reflects the cost of borrowing funds in the interbank market, so changes in the rate can provide insight into the overall health of the banking system and the level of liquidity in the market.
4. It is a reference for borrowing and lending between banks: LIBID is the rate at which banks can borrow funds from other banks in the London interbank market, so it is an important reference for banks when making decisions about lending and borrowing.
5. It is used for regulatory purposes: LIBID is also used by regulatory authorities to monitor the functioning of the banking system and to set capital requirements for banks.

In summary, LIBID is important to banks because it serves as a benchmark for short-term interest rates, is used as a reference rate for derivatives, can indicate the health of the interbank market, used as reference for borrowing and lending between banks, and also used for regulatory purposes.

Other benchmark interest rates

There are several other benchmark interest rates that are similar to LIBID. Some of the most notable ones include:

• Euribor: The Euro Interbank Offered Rate, which is the benchmark interest rate for the Eurozone.
• Fed Funds Rate: The rate at which depository institutions lend money to each other overnight in the United States.
• SIBOR: The Singapore Interbank Offered Rate, which is the benchmark interest rate for Singapore.
• TIBOR: The Tokyo Interbank Offered Rate, which is the benchmark interest rate for Japan.
• HIBOR: The Hong Kong Interbank Offered Rate, which is the benchmark interest rate for Hong Kong.
• SHIBOR: The Shanghai Interbank Offered Rate, which is the benchmark interest rate for China.

These benchmark rates are used as reference rates for various financial products such as loans, mortgages, and derivatives. They are determined by the respective central banks or financial institutions and are considered as a barometer of the health of the respective financial systems.

British Bankers' Association

LIBID stands for London Interbank Bid Rate. It is the interest rate at which banks can borrow funds from other banks in the London interbank market. LIBID is used as a benchmark for short-term interest rates and is often used to set interest rates on loans and other financial instruments. It is also used as a reference rate for some financial derivatives. The rate is determined by a survey of a panel of banks conducted by the British Bankers' Association (BBA).