Say Goodnight London: European Banks Grind To A Halt

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LIBOR rate at an all-time high.....

Say Goodnight London: European Banks Grind To A Halt

September 30, 2008 (LPAC)--Banks in Europe are becoming increasingly reluctant to lend to each other, and charging high interest rates when they do.

The LIBOR (London Interbank Offered Rate), the rate at which banks make unsecured loans on the London interbank market, hit an all-time high of 6.88 percent today, and bank analysts say there is no money market lending in Europe or the U.S., with the only lending coming from the central banks.

The European Central Bank offered $30 billion in one-day loans at 11 percent interest, and received $77 billion in loan requests from desperate banks. Banks are hoarding their cash for their own use, rather than lending it out, as they seek to avoid failure.