High interbank interest rates reinforce credit crisis

The influence of the interbank interest rate is palpable. The credit crisis started a year ago. Before that, the stock markets rose relentlessly due to takeovers and speculation. It couldn’t happen, with the takeover of ABN AMRO bank as the leader in our country. The economic reality has now changed significantly. But a high interbank interest rate is to your advantage at the Leaseplan bank. The savings interest there is based on this interest.

Mortgage crisis US

The mortgage crisis in the US started in mid-2007 and has now almost disappeared from the media. It was no longer possible to hide away. Many banks got into trouble, many jobs disappeared. All in all very serious. What is perhaps even more serious is that banks no longer trust each other. Credit rating agencies such as Moody’s issued overly favorable ratings, resulting in the purchase of products that contained many more risks than reflected in the rating. Some banks feel cheated, others consciously took big risks. But the whole thing has not been good for mutual trust. The interbank credit tap is currently dripping. It no longer flows. Despite all the efforts of the central banks.

The Libor interest rate

Banks are used to selling risks and borrowing money from each other where possible. The interest rate used for this is called the interbank interest rate. This interest rate is directly related to the so-called Libor interest rate. Libor stands for London Interbank Offered Rate. The Libor rate is the basic interest rate used for loans between banks. LIBOR is determined daily by the Dow Jones Markets for the British Bankers Association, the BBA, the governing body of LIBOR. The Libor interest rate is therefore a benchmark for the price of loans and credits.

Interest rates are rising

The short Libor interest rate is rising and with it the savings interest on private accounts. Before the mortgage crisis, this interest rate in the EU was relatively stable at around 5%, but now the interest rate is over 5.5%. This increase is partly caused by the risk surcharge that banks now charge each other. After all, you never know. Banks worldwide have written off enormous amounts, and who knows what will follow? Moreover, the banks desperately need the money and the supervisors are setting higher standards

Risks on the stock market

Many prices have been pushed up by takeovers. Look at ABN AMRO, for example. At first ABN AMRO was almost the lantern bearer on the stock exchange, but as soon as the takeover rumors arose, the price rose sharply. We also know that prices have been pushed up by all kinds of share buyback programs. If the credit tap remains closed, it is almost inevitable that the stock markets will collapse further and economic growth will slow down further. That will make saving even more attractive. It remains to be seen whether state support will provide sufficient relief.

September 1873

Some even compare the current period with 1873. In September 1783, the stock markets collapsed like a house of cards due to the sudden increase in rates on the money market. Even then, the banks no longer understood the complicated products they had devised themselves. A long depression followed, in which savings were of great importance. And now? Watch:

September 28, 2008

Monday, September 28, 2008 will go down as a Black Monday, with prices on the stock exchanges plummeting. The Overnight rate increased from 2.57% to 6.88%. This is one of the largest increases ever in the interbank lending rate.

October 13, 2008

After the EU summit meeting this weekend, the Prime Minister announced that interbank transactions are currently guaranteed by the state up to an amount of 200 billion euros. This action should restore mutual trust between banks. This guarantee is in addition to the injection of 20 billion euros into an emergency fund that the cabinet recently established. Financially healthy institutions can temporarily fall back on this until the situation in the financial sector returns to normal.

October 25, 2008

The AEX recorded a loss of 10% during the day, ending with a much smaller loss. Partly because sales of existing houses in the US were better than expected, but a significant part of this windfall was due to the additional forced sales. So what do you mean, good news? And what will this bring us?

Savings

The person who seems to stand out is the consumer with some savings. Banks are competing with each other with high savings interest rates and that trend does not seem to be coming to an end anytime soon. Please take advantage of it.

Lease plan bank

The Leaseplan bank is the only savings bank in our country that offers a savings interest rate based on the Euribor. This means that with a higher Euribor, the interest at the Leaseplanbank is also higher. This way you as a consumer can benefit from it.