The Mibor (Madrid InterBank Offered Rate) is the interest rate at which banks lend money in the interbank market in Madrid.

This index is used to know the price of money at which banks based in Spain or that operate in the country lend money to each other. It fulfills the same function as the Euribor at the European level.

The Mibor is the base interest of loans between banks, which is defined for large interbank transactions. This rate varies depending on the market conditions, the term, volume and confidence between the entities. The term is 1 day, 1 month, 3 months, 6 months and 1 year.

Although the Mibor is still in force, it has lost much of its importance since the entry of the Euribor (Euro, as of 1999). Currently, the reference index for all the countries that adopted the euro is the Euribor, at European level and standardized across all entities. This has allowed entities to broaden the trading horizon to a higher level, but on the contrary, it has meant a higher level of systemic risk, as has been verified during the financial crises of recent years.

Until the entry of the euro, the Mibor was the reference index for mortgage operations in Spain of all operating entities in the country, which added to a differential, was the cost of money of the end consumer for mortgages and was listed as a benchmark for others financial operations such as loans, credits and derivatives.

How Mibor works

The Bank of Spain publishes the average of the data of the loan operations between banks based on the volume of negotiation, taking into account the price at which the money has been lent, the minimum and maximum cost, the term of indebtedness and the volume of money. In this way, you obtain a ratio that conforms the average of all the previous variables.

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