Interbank lending best left to private sector

You say “eether”, and I say “either”. You say “Eebor”, and I say “Eibor”. Banks in the UAE have been trusted to come up with the Emirates interbank offered rate, or Eibor, themselves, but now the Central Bank wants to call the whole thing off.

Eibor, it seems, is too high for the Central Bank’s liking. So it wants to oversee the reporting and compilation of the measure. Earlier this week, it called bankers into its headquarters to tell them it would be setting up a new, official interbank rate that will be “a fair representation of the prevailing market conditions”.

Interbank rates such as Eibor refer to the rates that banks charge each other for very short-term loans, as in overnight. Banks usually trust each other more than they do any other borrower, and to the extent that they can trust each other, they trust that conditions are unlikely to worsen significantly overnight.