what was libor and why was it abandoned 
the london interbank offered rate or libor was a benchmark interest rate at which major global banks lent to one another in the international interbank market for short term loans the decision to abandon libor was primarily driven by two key factors manipulation scandals and the evolving nature of financial markets in the early 2010s investigations revealed that several banks had manipulated libor submissions to benefit their trading positions undermining trust in the rate s integrity in addition the 2007 to 2008 financial crisis exposed the fragility and potential unreliability of the interbank lending market with fewer banks participating in daily rate submissions libor was no longer a good or reliable benchmark the bottom linean fra is an otc contract that establishes an interest rate to be paid at a predetermined future date the parties in the fra do not exchange the notional amount instead they settle the contract in cash based on the rate difference and the contract s notional value parties can enter into an fra to hedge against or benefit from future interest rate movements borrowers can use an fra to fix their borrowing costs while lenders can lock in a predetermined rate should market rates fall 