Everything You Wanted to Know About LIBOR, but Were Afraid to Ask

How is LIBOR calculated? The UK trade association BBA provides a fairly detailed analysis of the process. The key here is what the rate is meant to be. The contributors are supposed to submit a rate for each currency they contribute for overnight one week two week and monthly out to a year. The rate is meant to answer the question: “At what rate could you borrow funds were you to do so by asking for and then accepting inter-bank offers in a reasonable market size just prior to 11 a.m.?” This is a bit like self-reporting your weight. The