Regulatory Changes to U.S. Money Markets Could Increase Borrowing Costs
LIBOR (London Interbank Offered Rate) is a good measure of the cost of corporate borrowing because it is the average of interest rates estimated by each of the leading banks in London that it would be charged were it to borrow from other banks. Typically, a rising LIBOR rate is a sign of stress in the corporate credit markets, as seen in 2008/2009. We are seeing LIBOR rising again, but for a different reason: the unintended (or intended) consequences of government regulation. The Blackrock Blog looks into the cause and effect here.