The Economist: The Shibor shock

Banks do not keep their doors open an extra half-hour just because their customers need more money. But when the banks themselves are short of cash, things are different. On June 19th China’s interbank market stayed open late as banks scrambled to borrow funds from each other. On June 20th the seven-day repo interest rate shot up to 12%, the highest on record (see chart). The Shanghai interbank offered rate (SHIBOR), an average of the rate at which big banks say they will lend, also rose.

Read More