The financial system has been rocked by a succession of failures and government bail-outs causing stunned counterparties to flee the interbank lending markets.
Despite actions from central banks around the world to inject funds into money markets, three-month dollar Libor was fixed at 4.053% on September 30, compared with 2.81% at the start of the month. Meanwhile, the Ted spread, which tracks the difference between three-month Libor and US Treasury bills, hit 3.537% on September 29.
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