A high TED spread means that banks expect they are taking on a high level of risk when they lend to each other.

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The TED spread is the difference between the interest rates on interbank loans and short-term U.S. government debt. A high TED spread indicates that banks perceive a higher risk of default among their counterparties and are charging higher interest rates to compensate for that risk. This suggests that banks are less willing to lend to each other, which could signal a lack of confidence in the financial system and potential instability.

A High TED Spread Means That Banks Expect They Are