Much has been written and said about recent increases in Libor, which is said to be reflecting growing anxiety in the global banking system: banks are, once more, becoming reluctant to lend to each other. To put this into perspective, three month US dollar Libor exceeded 0.5 per cent last week for the first time since July. At that time the TED spread was around 32 basis points and last week it was around 38 bps.In Australia, the spread between the three-month overnight index swap and bank bill rate was also around 38 bps, last week. It last saw this level in February 2010.  These are not crisis levels and are well below the extreme spreads of 447 bps and 143 bps respectively, seen in early October 2008. Moreover, just to confirm that there are no signs of stress in Australia, the average daily balance of funds held in exchange settlement accounts with the Reserve Bank has been just A$1.4 billion, this month and last. Very much at the low end of the range and well below the October 2008 peak of A$8.7 billion.