DEFINITION of 'Australian Financial Markets Association (AFMA) Bank-Bill Reference Rate (BBSW)'

The bank bill interest rate is the wholesale interbank rate within Australia and is published by the Australian Financial Markets Association (AFMA). It is the borrowing rate among the country's top market makers, and is widely used as the benchmark interest rate for financial instruments.

BREAKING DOWN 'Australian Financial Markets Association (AFMA) Bank-Bill Reference Rate (BBSW)'

The bank bill interest rate is Australia's equivalent of LIBOR or SIBOR and is used as a reference rate in much the same way. For instance, a variable floating rate may quote 100 basis points over LIBOR, whereas in Australia they may use 100 basis points over the BBSW. Although frequently abbreviated to "bank bill rate", the actual term is the "bank bill swap interest rate", hence the abbreviation BBSW.

RELATED TERMS
  1. Reference Rate

    An interest rate benchmark upon which a floating-rate security ...
  2. Interbank Rate

    The rate of interest charged on short-term loans made between ...
  3. LIBOR

    LIBOR or ICE LIBOR (previously BBA LIBOR) is a benchmark rate ...
  4. Reserve Bank of Australia

    The Reserve Bank of Australia is Australia's central bank and ...
  5. Variable Interest Rate

    A variable interest rate is an interest rate on a loan or security ...
  6. AUD (Australian Dollar)

    The currency abbreviation for the Australian dollar (AUD), the ...
Related Articles
  1. Insights

    Who Uses Libor Data And Why?

    LIBOR is a crucial benchmark reference rate with global economic impact.
  2. Insights

    London Interbank Offered Rate (LIBOR)

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

    The Australian Dollar: What Every Forex Trader Needs To Know

    With its unique relationship to the Japanese yen, the AUD is an important currency for FX traders.
  4. Insights

    Is It Time to Invest in Australia?

    Australia a country rich in natural resources and one increasingly gaining attention from investors. Is it time to put some of your international allocation to work in Australia?
  5. 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 ...
  6. Investing

    Will Australia Do Away With Its $100 Bill?

    UBS analysts suggest that Australia should get rid of its highest denomination bill.
  7. Trading

    Will OIS Replace LIBOR?

    LIBOR manipulation by large banks during the financial crisis has raised serious doubts about the interest rate's reliability. Now, the question is whether to reform the rate or replace it with ...
  8. Investing

    How To Read Interest Rate Swap Quotes

    Puzzled by interest rate swap quotes terminology? Investopedia explains how to read the interest rate swap quotes
  9. Insights

    10 Countries With Lower Interest Rates Than the US

    Learn about the 10 countries with lower interest rates than the United States and how interest rates indicate a country's economic outlook.
  10. Personal Finance

    How Interest Rate Cuts Affect Consumers

    Traders rejoice when the Fed drops the rate, but is it good news for all? Find out here.
RELATED FAQS
  1. 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 >>
  2. What are the differences between the Federal Funds Rate and LIBOR?

    Learn the key differences between the federal funds rate and the London Interbank Offered Rate, including currency denomination ... 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. Who determines the LIBOR rate?

    Learn about what the LIBOR rate is, how it is determined and calculated, and who determines what the LIBOR rate on a daily ... Read Answer >>
  5. 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 >>
  6. How can LIBOR be used as an economic indicator?

    Learn how the LIBOR is used, how it is calculated and how it can be used with Treasury bill rates to gauge the health of ... Read Answer >>
Hot Definitions
  1. Leveraged Buyout - LBO

    The acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. ...
  2. Current Assets

    A balance sheet account that represents the value of all assets that can reasonably expected to be converted into cash within ...
  3. Tax Liability

    The total amount of tax that an entity is legally obligated to pay to an authority as the result of the occurrence of a taxable ...
  4. Preferred Stock

    A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shares ...
  5. Net Profit Margin

    Net Margin is the ratio of net profits to revenues for a company or business segment - typically expressed as a percentage ...
  6. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
Trading Center