In the current money market conditions, where banks have to approach the central bank for borrowing, the overnight lending rate is in fact the key operational policy rate.

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It has long been against the rules for banks to engage in arbitrage by borrowing at the discount rate and lending in the Fed Funds market at a higher rate.

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In finding Barclays guilty of attempting to manipulate the important Libor borrowing rate, the benchmark rate for bank-to-bank lending, the Financial Services Authority (FSA) made an elliptical reference to this conversation.

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Borrowing costs have surged as the central bank raised its policy lending rate 13 times between early 2010 and late 2011 to control inflation.

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What the FT says is that the financially challenged Spanish government is a bit worried about raising the 19bn euros by selling government bonds in the normal way - because, as probably hasn't escaped your notice, investors have become more wary of lending to Spain, and its borrowing costs have therefore risen very sharply (the implied interest rate on 10-year loans to Spain was 6.4% this morning).

BBC: No magic potion for eurozone banks