London Interbank Offer Rate

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London Interbank Offer Rate

The interest rate participating banks offer to other banks for loans on the London market. LIBOR is the most widely used benchmark for short term interest rates in the world, primarily because most of the world's largest borrowers borrow money on the London market. Because it is so prominent, it is often used in other transactions, such as swaps. For example, an interest rate swaps may give the floating rate as "LIBOR +/- X base points." It is set each day by the British Bankers Association, which calculates it by averaging short term, inter-bank, deposit interest rates among the most creditworthy banks. See also: EURIBOR.
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SBP had in 2004 advised all commercial banks in Pakistan to deploy Kibor as the bench mark rate like London inter bank offer rate (Libor).
Islamic banking in Pakistan to get new concessions
He has further said that the PTA will award licence to the bid winner and thus the successful bidder will be required to deposit half of the offer price, whilst the outstanding payment must be made by a period of up to five years, including London Inter Bank Offer Rate and 3% gain on the amount.
Pakistan : ISLAMABAD: National Exchequer to net $1.3b via selling 3G & 4G licences
The scandal surrounding Barclays Bank and allegations that the London Inter Bank Offer Rate (LIBOR) was manipulated has created a major uproar in the UK, but such incidents are not entirely new.
Introspection time for banks
The key contention of those who oppose the use of the London inter bank offer rate (libor) argue that utilising it as a reference rate for pricing Islamic instruments means that we are using a benchmark that is utilised to price money in the conventional financial markets, because libor usually represents the base rate of interest, on top of which a margin is added.
Contentious reference rate

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