LIBOR (Historical)
LIBOR (London Interbank Offered Rate) was the global benchmark interest rate at which major banks indicated they could borrow unsecured funds from each other, underpinning hundreds of trillions of dollars in financial contracts before its discontinuation in 2023.
The London Interbank Offered Rate was for decades the most widely referenced benchmark interest rate in global finance. Administered by the Intercontinental Exchange (ICE), LIBOR was calculated daily across five currencies (USD, EUR, GBP, JPY, CHF) and seven maturities (overnight through 12 months), representing the rate at which a panel of large banks estimated they could borrow unsecured funds from other banks in the interbank market at 11:00 a.m. London time.
At its peak, LIBOR underpinned an estimated $350 trillion or more in financial contracts, including adjustable-rate mortgages, student loans, corporate credit facilities, interest rate swaps, currency swaps, structured notes, and floating-rate bonds. The rate was embedded in virtually every major segment of global credit markets. For U.S. borrowers specifically, 3-month USD LIBOR served as the benchmark for the vast majority of floating-rate commercial loans and syndicated credit agreements.
In 2012, investigations by regulators in the United States, United Kingdom, and Europe revealed that traders and managers at multiple major banks — including Barclays, UBS, Deutsche Bank, and others — had systematically manipulated their LIBOR submissions to benefit their derivatives trading positions and to signal financial health during the 2008 crisis. The scandal resulted in billions of dollars in fines and settlements and irreparably damaged confidence in the benchmark's integrity.
Because LIBOR was based on estimates ('where do you think you could borrow?') rather than actual transactions, it was vulnerable to manipulation, particularly in the short-term maturities where genuine interbank activity was limited. This structural flaw drove the global push to replace LIBOR with transaction-based alternatives — SOFR in the United States, SONIA in the United Kingdom, ESTR in the eurozone.
USD LIBOR officially ceased publication on June 30, 2023. Contracts that could not be transitioned to SOFR by that date were handled using the Adjustable Interest Rate (LIBOR) Act, which President Biden signed in 2022, providing a statutory fallback to SOFR-based replacement rates for legacy contracts governed by U.S. law.