What is the interbank market?

The interbank market, as its name suggests, is the mercado in which banks intervene to be able to lend money to each other at a certain price and interest.

Operations in the interbank market are very common by certain financial institutions. Whether it is to finance large projects, help other banks, or try to rescue them with a little help, operations in the interbank market are the most common.

One of the most important indicators within this market is the Euribor, which is the price at which European banks lend money. However, it should be noted that the loan term is usually short, with high liquidity and low risk.

Interbank market rates

Among the different types of interbank market that we find, we highlight:

  • Interbank foreign exchange market: they operate with banks from different countries to exchange surplus foreign exchange.
  • Interbank market for transferable deposits: consumer deposits in the different banks are exchanged between them.
  • Futures markets: in which derivative assets are traded.

Characteristics of the interbank market

Regarding the main characteristics of the interbank markets, we can mention:

  • Which is made up of banks, insurance companies, savings banks and all those institutions that have a financial nature
  • Low risk assets and high liquidity are usually operated, usually they are money loans, deposits and short-term financial investments.
  • Large monetary resources are usually operated.
  • Mortgage valuation indices are thanks to Euribor, which is the price at which banks exchange money.
  • The money used and exchanged is thanks to the excess liquidity and treasury that a bank has, which are lent to each other to cover its financing needs.

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