. ▁ ▁L IB OR ▁is ▁ris ky ▁in ▁the ▁sense ▁that ▁the ▁l ending ▁bank ▁lo ans ▁c ash ▁to ▁the ▁borrow ing ▁bank , ▁and ▁the ▁O IS ▁is ▁stable ▁in ▁the ▁sense ▁that ▁both ▁counter part ies ▁only ▁swap ▁the ▁floating ▁rate ▁of ▁interest ▁for ▁the ▁fixed ▁rate ▁of ▁interest . ▁The ▁spread ▁between ▁the ▁two ▁is , ▁therefore , ▁a ▁measure ▁of ▁how ▁likely ▁borrow ing ▁banks ▁will ▁default . ▁This ▁reflect s ▁counter party ▁credit ▁risk ▁prem iums ▁in ▁contrast ▁to ▁liquid ity ▁risk ▁prem iums . ▁However , ▁given ▁the ▁mismatch ▁in ▁the ▁ten or ▁of ▁the ▁fund ing , ▁it ▁also ▁reflect s ▁wor ries ▁about ▁liquid ity ▁risk ▁as ▁well . ▁ ▁Historical ▁levels ▁In ▁the ▁United ▁States , ▁the ▁L IB OR – O IS ▁spread ▁generally ▁maintain s ▁around ▁ 1 0 ▁. ▁This ▁changed ▁ab rupt ly , ▁as ▁the ▁spread ▁jump ed ▁to ▁a ▁rate ▁of ▁around ▁ 5 0 ▁ ▁in ▁early ▁August ▁ 2 0 0 7 ▁as ▁the ▁financial ▁mark ets ▁began ▁to ▁price ▁in ▁a ▁higher ▁risk ▁environment . ▁Within ▁months , ▁the ▁Bank ▁of ▁England ▁was ▁forced ▁to ▁rescue ▁Northern ▁Rock ▁from ▁failure . ▁The ▁spread ▁continued ▁to ▁maintain ▁histor ically ▁high ▁levels ▁as ▁the ▁crisis ▁continued ▁to ▁unfold . ▁ ▁As ▁mark ets ▁improved , ▁the ▁spread ▁fell ▁and ▁as ▁of ▁October ▁ 2 0 0 9 , ▁stood ▁at ▁ 1 0 ▁ ▁once ▁again , ▁only ▁to ▁rise ▁again ▁as ▁strugg les ▁of