What Is the Stockholm Interbank Offered Rate?
Stockholm Interbank Offered Rate - STIBOR - is the official interbank offer rate for short term loans in Sweden. The Stockholm Interbank Offer Rate is determined by the Riksbank, Sweden's central bank, and is often used for one or three-month terms. STIBOR is the interest rate banks are charged when borrowing from other banks for maturities longer than overnight.
Understanding the Stockholm Interbank Offered Rate (STIBOR)
STIBOR is used in Sweden similar to how LIBOR is used in the United States and United Kingdom. It serves as a benchmark for many floating interest rate instruments. The rate is to be used for short term loans, which are less than one year in a maturity.
How STIBOR Works
"Stockholm Interbank Offered Rate is a reference rate. It shows an average of the interest rates that a number of banks - Stiborbanker - active in the Swedish money market are willing to lend to each other without collateral during different maturities, according to the Swedish Bankers Association.
"A steering committee consisting of representatives of all Stibor banks supervises the daily fixing of the rates. The Board of Directors of the Banking Association appoints members and personal deputies for these. The committee elects a chairman and a vice-chairman. The term of office is two years and may be extended.
Stibor (Stockholm Interbank Offered Rate) is a reference rate that shows an average of the interest rates on which a number of banks operating on the Swedish money market ("Stiborbanken") are willing to lend to each other without collateral during different maturities.
Fixed rate agreements are significantly linked to Stibor. This framework governs how Stibor's determination is controlled and controlled, what is applicable to Stiborbanken, how these are chosen and how transparency about Stibor is achieved. The Swedish Banking Association, which is responsible for the framework, has established a Stibor Committee and a secretariat for the management of Stibor-related issues. The information for these is stated in the framework."
Stibor is determined according to the following framework: Rules of control and control; Rules for the reporting and calculation of Stibor; and Rules for Stiborbanken's internal control.
Stibor has a whistleblower system to report any irregularities. To ensure anonymity, the service is handled by an external party, Whistleblowing Center. The reporting channel is encrypted and password protected and all reports are treated confidentially.
This system came about after a LIBOR scandal, peaking in 2008, in which financial institutions were accused of colluding to fix the rate at unwarranted levels. The LIBOR scandal involved bankers from various financial institutions providing information on the interest rates they would use to calculate LIBOR. Evidence suggests that this collusion had been active since at least 2005, potentially earlier than 2003.