The rate banks say they pay each other for three-month dollar loans may rise to a one-year high if European policy makers fail to stymie investors’ concern the region’s debt crisis is worsening, according to Barclays Plc.
The London interbank offered rate, the benchmark for $360 trillion of securities, may not survive allegations of being corrupted unless it’s based on transactions among banks rather than guesswork about the cost of money.
A Standard & Poor’s plan to change the way it rates the credit risk of counterparties in repurchase agreements will boost costs for broker-dealers who draw cash through the arrangements and shrink the pool of liquid assets for money funds, according to industry participants.
A planned change in deposit insurance fees for U.S. banks may lower already near-zero short-term interest rates, according to strategists at Barclays Plc, Bank of America Merrill Lynch and the Royal Bank of Canada.
Bank of New York Mellon Corp. will charge institutional clients a fee for unusually high deposits as a flight to safety pushed money-market rates below zero and left the largest custody bank flooded with client cash.