Why is the LIBOR differential getting larger?

London, UK - 7th December 2007, 09:19 GMT

Dear Open ATCA & Philanthropia Friends

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

Although the Bank of England has cut base rates by 25 basis points yesterday to 5.5%, the real challenge lies in the increasing differential between base rates and LIBOR (London Interbank Offered Rate) for sterling, euro and dollar in the money markets, pointing to a clear erosion of trust in interbank lending. Three month sterling LIBOR, which was fixed yesterday at 6.64%, last peaked in September at a differential of 112 basis points and the spread this morning stands at 114 basis points (bps). What are your views in regard to the graph below?

3 month LIBOR - 3 month OIS spread (bps)


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Best wishes

DK Matai, Chairman, Asymmetric Threats Contingency Alliance (ATCA)

Open ATCA, IntentBlog, Holistic Quantum Relativity Group
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ATCA: The Asymmetric Threats Contingency Alliance is a philanthropic expert initiative founded in 2001 to resolve complex global challenges through collective Socratic dialogue and joint executive action to build a wisdom based global economy. Adhering to the doctrine of non-violence, ATCA addresses asymmetric threats and social opportunities arising from climate chaos and the environment; radical poverty and microfinance; geo-politics and energy; organised crime & extremism; advanced technologies -- bio, info, nano, robo & AI; demographic skews and resource shortages; pandemics; financial systems and systemic risk; as well as transhumanism and ethics. Present membership of ATCA is by invitation only and has over 5,000 distinguished members from over 120 countries: including 1,000 Parliamentarians; 1,500 Chairmen and CEOs of corporations; 1,000 Heads of NGOs; 750 Directors at Academic Centres of Excellence; 500 Inventors and Original thinkers; as well as 250 Editors-in-Chief of major media.

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