This Chart Shows How Markets Are Losing Faith In Europe's Financial System


The London Interbank Offered Rate (LIBOR), which is a benchmark rate at which banks borrow money from each other, has been rising.


While the current Libor, at just above 0.5%, is far below the sky-high levels of 4.81875% reached at the height of the financial crisis in 2008, it is still a significant jump from 0.25% as recently as March.

Yet as shown in the Wall Street Journal graphic to the right, 3-month LIBOR, which is a measure of trust in banks, is higher for European banks vs. U.S. ones, thus showing less trust.

On Monday, German state-controlled lender WestLB AG said it cost 0.565% to borrow dollars for three months, up from 0.38% a month earlier. U.S. banks are reporting lower costs: Bank of America Corp., said its three-month dollar Libor stood at 0.48%. J.P. Morgan Chase & Co. reported a 0.47% rate.

Higher borrowing costs cut into profits, and could add further strain to troubled European banks, pushing more over the edge.

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