LIBOR will at last be switched off in June

Like slide rulesliborliborliborliborgdplibor and martini lunches, the London interbank offered rate () was once a fine idea. In 1969 Iran’s central bank was looking for an $80m loan—at the time a hefty ticket for a high-risk country without the foreign-exchange reserves to cover it. So Minos Zombanakis, their banker, clubbed together a syndicate of banks which would each lend some of the money. But what interest rate to charge? Inflation was rising and rates were volatile; no bank wanted to lend at a fixed rate in case that left them out of pocket.Zombanakis’s solution was . Every interest period, each bank would report its cost of borrowing. The average of these, plus a spread for profit, would be the loan’s interest rate. If the lenders’ costs rose from period to period, so would their income. The idea took off—and with it, the market for syndicated loans. By 1982 this market was worth $46bn and mostly pegged to . Derivatives, home loans and credit cards followed. By 2012 set the rates for contracts governing some $550trn, more than seven times global . Yet ever since then has been on the decline. Next month its final few fixings, for dollar lending, will be switched off for good.