• LIBOR is the base interest rate at which major world banks lend to each other.
  • LIBOR is administered by the Intercontinental Exchange, which asks the world’s major banks how much they will charge other banks for short-term loans.
  • The rate is calculated using waterfall methodology, a standardized, transaction-based, data-driven, layered method.
  • The LIBOR rate has been subject to manipulations, scandals and methodological criticism, which today makes it less reliable as a base rate.
  • LIBOR is replaced by the Secured Overnight Funding Rate (SOFR) on June 30, 2023, and will be phased out after 2021.