Interbank Offered Rates have been widely used as a benchmark interest rate for the pricing of cash and derivatives products.
The London Interbank Offered Rate (“LIBOR”) is the most prominent interbank offered rate, and is used in a wide range of banking products globally, including loans, credit cards, bonds and derivatives. LIBOR reflects an interbank interest rate which is calculated using the interest rate submitted by participating banks. However, many factors, including the manipulation of the rate by certain participating banks around the time of the Great Financial Crisis, has led to the gradual phasing out of LIBOR.