A:

Both LIBID and LIBOR are rates primarily used by banks in the London interbank market. The London interbank market is a wholesale money market in London where banks exchange currencies either directly or through electronic trading platforms.

The acronym LIBID stands for London Interbank Bid Rate. It is the bid rate that banks are willing to pay for eurocurrency deposits in the London interbank market. Eurocurrency deposits refer to money in the form of bank deposits of a currency outside the country that issued the currency. However, eurocurrency deposits may be of any currency in any country. The most common currency deposited as eurocurrency is the US dollar. For example, if US dollars are deposited in a European bank or any bank outside the U.S, then the deposit is referred to as a eurocurrency.

LIBOR stands for London InterBank Offered Rate. LIBOR is the interest rate at which banks borrow money from other banks in the London interbank market. The LIBOR is set on a daily basis by the British Bankers' Association. The LIBOR is derived from a filtered average of the world's most creditworthy banks' interbank deposit rates for larger loans with maturities between overnight and one full year. LIBOR is the most widely used point of reference for short-term investment interest rates.

To learn more, see An Introduction To LIBOR.

This question was answered by Chizoba Morah.

RELATED FAQS
  1. What is the difference between LIBOR, LIBID and LIMEAN?

    LIBOR, LIBID and LIMEAN are all reference rates used to benchmark short-term interest rates. The London Interbank Offered ... Read Answer >>
  2. How does LIBOR compare to the Federal Reserve rate as an accurate indicator?

    Explore a comparison of the predictive efficacy of the Federal Reserve's fed funds rate and the Intercontinental Exchange's ... Read Answer >>
  3. How did LIBOR come into use?

    Learn about the significance of the London Interbank Offered Rate, or LIBOR, and the history of how the daily LIBOR became ... Read Answer >>
  4. Where on the internet can I find LIBOR rate information?

    Learn what the LIBOR is, which website provides general LIBOR information and which website provides ICE LIBOR data going ... Read Answer >>
  5. How did the LIBOR scandal affect interest rate swaps?

    Find out how the LIBOR scandal directly enriched some interest rate swap traders and harmed others by understating the real ... Read Answer >>
  6. How is Libor determined?

    Libor is the major rate used to price debt stock. Libor is actually a set of several benchmarks that reflect the average ... Read Answer >>
Related Articles
  1. Insights

    London Interbank Offered Rate (LIBOR)

    Learn more about this rate which banks use to determine the amount of interest to charge other banks.
  2. Investing

    The Importance Of LIBOR In Financial Markets

    What is LIBOR and why are its interest rates so important to the financial markets?
  3. Insights

    What Is ICE LIBOR And What Is It Used For?

    In the case of ICE LIBOR, an innocent-sounding set of letters has a profound bearing on every loan you make.
  4. Personal Finance

    An Introduction To LIBOR

    This influential rate is published daily in Britain, and felt all around the world.
  5. Investing

    Why BBA LIBOR Was Replaced By ICE LIBOR

    We track the reason behind the change in LIBOR's prefix from BBA to ICE.
  6. Insights

    What Is The Relationship Between The Federal Funds, Prime And LIBOR Rates?

    The prime rate and LIBOR rate, two of the most prominent benchmark rates, tend to track the federal funds rate closely over time. However, during periods of economic turmoil, LIBOR appears more ...
  7. Financial Advisor

    How Tom Hayes Fixed Libor 

    For such an important number, the Libor rate was an easy fix. How did Tom Hayes, the main trader involved in the rate fixing scandal, do it?
  8. Investing

    Deutsche Bank Fined for LIBOR Fraud

    Deutsche Bank has settled with the Department of Justice for colluding with other banks to set the LIBOR. The price tag: $1.74 billion.
  9. Insights

    Wall Street May Be Brexit's Big Winner (MS, JPM)

    New York is poised to become the financial capital of Europe when the UK - and London - separate from the EU as part of Brexit
  10. Managing Wealth

    How Much Money Do You Need to Live in London?

    Find out what it takes to live in London, including the average costs of living for students, professionals and unemployed individuals.
RELATED TERMS
  1. London Interbank Bid Rate - LIBID

    The average interest rate which major London banks borrow Eurocurrency ...
  2. London Interbank Mean Rate - LIMEAN

    The mid-market rate in the London Interbank market, which is ...
  3. LIBOR

    LIBOR or ICE LIBOR (previously BBA LIBOR) is a benchmark rate ...
  4. Euro LIBOR

    London Interbank Offer Rate denominated in euros. This is the ...
  5. LIBOR Scandal

    A scandal in which financial institutions were accused of fixing ...
  6. Interbank Rate

    The rate of interest charged on short-term loans made between ...
Hot Definitions
  1. Current Ratio

    The current ratio is a liquidity ratio measuring a company's ability to pay short-term and long-term obligations, also known ...
  2. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  3. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  4. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  5. Indirect Tax

    A tax that increases the price of a good so that consumers are actually paying the tax by paying more for the products. An ...
  6. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
Trading Center