Euribor

The Euro Interbank Offered Rate (or Euribor) is a daily reference rate based on the averaged interest rates at which banks offer to lend unsecured funds to other banks in the euro wholesale money market (or interbank market).

Euribor and Libor are both benchmark interest rates used in the financial markets, but they are based on different currencies. Euribor is the Euro Interbank Offered Rate, while Libor is the London Interbank Offered Rate. The key difference is that Euribor is based on Eurozone banks, while Libor is based on banks in London. These rates impact the financial markets by influencing the cost of borrowing for banks and businesses, which in turn affects interest rates on loans and investments. Changes in these rates can impact global financial markets and the economy as a whole.

Euribor, or Euro Inter-bank Offered Rate, was created when all European banks went to one currency, the euro. It bases interest rates on rates at which 40/50 European banks borrow money from each other.

This is the rate at which participant banks within the European Union money market will lend to another participant bank in the EU money market.

Calculating cost of finance (COF) is quite individual for different banks. basically the things included in the calculation are: 1. Interest rates of deposits between the banks in the country you are in (in EU it is the EURIBOR, England has its LIBOR, etc.) - for your currency and different indicator for foreign currency (in UK they use EURIBOR for EUR and LIBOR for GBP). 2. The assets the bank has. 3. The liabilities - here things get messy, because they calculate the used liabilities as revenue and the liabilities they don't use, as expenditure (because you pay interest on these liabilities). 4. Some other factors. So, all these things have some weight and through some complicated formula you get some result. Basically, I am not really sure that is the truth, but from the things i have heard and seen and from my own deductions, that is what i came up with.

.- Stagnating oil prices (easily surpassing the $ 100 a barrel), driven by geopolitical uncertainties, the collapse of stock markets and subsequent diversion of speculative investment market and the expected oil production cuts by the OPEC.

2.-Continued escalation of prices of staple foods (around 15%), due to the effect called "second round" (translation by companies from increased costs of crude oil and raw materials along with wage increases the prices of manufactured products; abusive margins of companies and brokers and a totally inefficient administration and lack of mechanisms to control the ceaseless desboque with consequent rises in inflation and subsequent contraction of consumption.

3.-runaway inflation rates close to 6% and unbridled growth of foreign debt (d 2.5 billion U.S. dollars) and current account deficit (15% of GDP) for 2008 as a result of the above two points, with a consequent drop in state revenues Autonomies and loss of purchasing power of workers in a near future due to salary increases below the inflation rate or the freezing or reducing them.

4 .- Rise in interest rates by the European Central Bank to reach 4.5% in the last quarter of 2008 with the aim of trying to curb rampant inflation in the euro zone (close to 5%) the immediate impact on mortgages and bank loans due to increases chilling Euribor (up almost 6%); economic strangulation consequent extensive social and dramatic increase in delinquencies and embargoes banking collapse of securities (around the IBEX 10,000 points at the end of the year) and diversion of investment to fixed income and real estate.

5 .- An increase in the rate of unemployment up to 12.5% at the end of 2008, due to the outbreak of the housing bubble and subsequent domino effect in the sectors linked to the construction of a united euro artificially appreciated that the cause of the bottleneck exports and the stagnation of the tourism sector (into recession in the second half of 2008 and ending the year with a meager increase of 1.5% of GDP), with the proverbial drop in state revenues and the consequent contraction of investments basic infrastructure and social service