/24-7PressRelease/ - LONDON, UK, September 06, 2007 - Rates in the money markets are a crucial issue in the liquidity crisis, the head of a leading investment bank has claimed.
According to Bob Diamond, chief executive of Barclays Bank investment banking division, the upward movement in the three-month Libor (London Interbank Offered Rate) in the past fortnight has proved a stumbling block as banks look to recover from the current financial downturn.
He told the Sunday Telegraph: "One of the big issues we face as a market - not just Barclays, not just sterling - is that 90-day commercial paper is moving to one-week commercial paper, 30-day commercial paper is moving to one-day commercial paper, six-month deposits are moving to five-day deposits.
He added: "For the recovery to continue we need to find more ways to get liquidity into the short end of the curve. That's down to confidence, and that's down to the central banks. We've seen thoughtful moves by the [US] Fed and the ECB."
Mr Diamond's comments come as figures show that in the last fortnight Libor rates soared as high as 6.69 per cent.
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