The notes I have here suggest that using a loopback interface provides a more stable 
interface than a physical interface.  As the loopback interface is up as long as the 
RAM is working the chances of losing this interface are greatly reduced.

Both OSPF and BGP use the highest active IP address as the router ID.  If a loopback 
address is configured they will use the loopback address.  Therefore the loopback 
address provides more stability.

It can also make network management and troubleshooting tasks easier.

Teunis.
On Monday, November 27, 2000 at 08:58:00 PM, whitaker wrote:

> Could someone explain the importance of using loopback interfaces?  I keep
> reading that it is important when using routing protocols to use loopback
> interfaces.  A consultant that is writing documentation for me suggested I
> obtain an entire class C network just for loopback addresses.  Cisco says
> when configuring BGP that, "We recommend you use a loopback interface to
> guarantee reachability in networks with multiple paths."  (from
> http://www.cisco.com/warp/public/459/23.html#3).
> 
> Maybe I'm missing something totally obvious here, but exactly what benefit
> do I gain from using loopback addresses?  I know it is supposed to provide
> reliability for routing protocols, but how?
> 
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