The cost of borrowing short term cash in the interbank markets has started to fall from record highs after central banks intervened earlier this month to pump hundreds of billions of dollars into the financial system to prop it up over the end of the year.

The European Banking Federation said yesterday that the one-month euro interbank offered rate, or Euribor, had dropped two basis points to 4.44%, the lowest percentage rate since November 29, while the corresponding rate for dollars fell one basis point to 4.85%.