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Interbank Rate |
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Interbank rate See: LIBOR Interbank Rate What Does Interbank Rate Mean? The rate of interest charged on short-term loans made between banks. Banks borrow and lend money in the interbank market to manage liquidity and meet their regulatory requirements. The interest rate charged depends on the availability of money in the market, prevailing rates, and the specific terms of the contract, such as term length. Investopedia explains Interbank Rate Banks are required to hold an adequate amount of liquid assets on reserve, such as cash, to manage potential withdrawals by their clients. If a bank cannot meet these liquidity requirements, it has to borrow money, and the interbank market helps cover the shortfall. Some banks, in contrast, have excess liquid assets above and beyond the liquidity requirements. These banks will lend money in the interbank market, receiving interest on the assets. There is a wide range of published interbank rates, including the LIBOR, which is set daily, based on the average rates on loans made within the London interbank market. Related Terms: How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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Instead, State Street consistently charged at or near the highest rate of the day, even if the interbank rate was lower at the time of trade. : United Arab Emirates (UAE) interbank rates are likely to extend falls after the central bank mulled a new me-chanism last week, but more mea-sures will be needed to boost lending and revive the eco-nomy, ban-kers said Wednesday. The Central Bank should therefore find ways to give incentives for commercial banks to lower the interbank rate, in our view, by injecting more liquidity in the banking system, therefore helping them to improve their loan-to-deposit ratio," she added. |
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