The interbank market is the market in which banks lend money to each other at an interest rate called the interbank rate. These are very short-term loans; the most common term for loans made in the interbank market is one day.
When banks have excess liquidity, they lend on the interbank market and receive interest for it. In the opposite case, when banks need liquidity they go to the same market, receive loans from other banks and pay an interest rate for them (interbank interest rate).
All operations are carried out telematically.
Related terms
Liquidity | Loan | Interest rate