The interest rate that European banks use to lend among themselves dropped to a record low this week in a sign of how credit markets have been distorted by central banks’ aggressive measures this year.

The euro short-term rate, known as €STR, slipped to minus 0.555% on 2 September, from minus 0.539% at the beginning of the year. On 31 August, the cost of overnight lending operations between the banks dropped to minus 0.557%, the lowest it has been since coming into effect in October 2019 after rate-rigging scandals led to the elimination of previous benchmarks.