HANDLING

Libor is a rate at which banks lend to one another, which is fixed on the basis of estimates made by the banks themselves. So, cheating is tempting:

• When the economy is going well, the banks are tempted to increase Libor and Euribor rates a bit, to lend a little more money and generate better returns.

• When the economy is getting worse and the banking sector is affected: if a bank is weak, it is by definition less solvent, which implies that other banks will lend it, with greater risk, to higher rates. higher. The process of calculating the Libor, however, allows this fragile bank to continue to announce daily low Libor rates to hide its poor financial health, continue to borrow at low rates and limit damage.

Since the credits in WAT$ are at the fixed rate of 1%, the risk of manipulation of the rates is discarded.