The Rate the Banks Once Rigged Is Jumping—and Causing Trouble

They’re calling it “Libor’s Revenge.” After years of drifting close to zero, the London interbank offered rate, a measure of what banks pay to borrow short-term from one another, has suddenly jumped. For three-month debt, it’s risen to 2.29 percent, the highest level since 2008.

Libor was made famous—Wall Street-famous, anyway—after the financial crisis, when European and U.S. banks were found to have been rigging the reported rate in ways that benefited their trading bets. Since then, a new organization has taken over calculating the rate, and regulators and bankers have been trying to phase Libor out. But its proved stubbornly hard to replace, and it still has consequences in the wider economy and markets.