As a result, we don’t need to go down the path of calculating BBSW as a broader measure of banks’ short-term wholesale funding, as is being considered for LIBOR and Euro Interbank Offered Rate (EURIBOR). This avoids the risk of there being a significant change in the characteristics of BBSW which could lead to contract frustration.
Doubts about their creditworthiness led markets to require higher risk premia, thereby stretching even further their public finances. These countries then fell into a vicious circle whereby expectations of them not being able to repay their debt pushed up interest rates and, as in a self-fulfilling prophecy, those higher refinancing rates made their public finances look increasingly unsustainable, thereby leading to a liquidity crisis.