LTG in this article
Goldrock introduces the impact of Libor interest rates ~
Before the U.S. subprude crisis erupted, rarely foreign exchange traders noticed Libor interest rates (borrowing interest rates in the London inter -bank interbank borrowing rate).
Since the spring of 2006, the storm of the US secondary mortgage market has begun to erupt, which has led to the subprime mortgage crisis.In 2008, the storm began to sweep the major financial markets in the world in the United States, the European Union, and Japan.After the outbreak of the subprime mortgage crisis, the credit rating of major large banks in the world has been lowered, and the credit of the banks corresponding to the banks has caused a significant increase in LIBOR interest rates.At that time, almost the headlines of all financial media around the world were related to the rise in interest rates of Libor.What is the interest rate of libor?Why should foreign exchange traders pay attention to libor interest rate?
The full name of Libor interest rate is London
Interbank offered
Rate, Chinese translation is the borrowing rate of inter -bank interbank interbank in London, which is a large international bank that is willing to borrow a loan from other large international banks when lending.Like people, banks often borrow money from each other. These large banks borrowing is no fixed guarantee. For example, assuming that after Bank A borrows huge funds from Bank B, Bank A will face great risks.The reason is that if Bank B will not repay the loan from Bank A once a breach of contract or bankruptcy, and Bank A will have huge capital losses.In fact, the different interest rate of Libor reflects different loan cycles.
Since the outbreak of the secondary loan crisis in 2008, the interest rate of LIBOR has soared overnight.Mainly because after the financial crisis broke out, banks could not estimate the risks of short -term borrowing.It is difficult for different banks to estimate all the core bond assets held by the other party. In fact, banks do not know the risks they will face.
One of the main reasons that caused banks to estimate the risk of lending is the subprime crisis in the US market.Under the premise of lack of certain regulatory rules and risk control, banks and some loan institutions provide loans to borrowers with poor credit and low income.When the US housing market is highly prosperous, the secondary mortgage loan market has developed rapidly, and even some borrowers who are generally considered to have the ability to repay have also obtained a home purchase loan.Drop a hidden danger.In order to reduce risks, the banks were sold for secondary mortgage loans in new financial instruments. In this way, benign creditor's rights and bad claims were mixed together. In the end, no one knew which banks had risks, and the same is true of banks.
The higher LIBOR interest rate not only means huge credit risks. In other words, some banks will go bankrupt because of this, and it will also bring huge shocks to the financial market.Because once the LIBOR interest rate becomes higher, the frequency of borrowing between banks will decrease, and the capital flow rate will be reduced.Some banks that urgently need funds will face bankruptcy because they cannot get loans in time.Once the bank breaks its funds, the company will encounter a fiscal crisis. Choose a break or close, leading to a decline in social and economic, and producing more instability.This is a vicious circle.The changes in LIBOR interest rates will affect the monetary policy of various countries, and it will also affect the supply and demand status of the market, and then affect foreign exchange transactions.
