When credit chains involve financial intermediaries such as banks, central banks can lower their target rates to reduce intermediaries' costs of borrowing, accept a wider range of collateral, guarantee interbank loans
, or shore up banks' health through capital injections.
In addition to lowering the ffr and increasing the supply of available funds for the interbank loan
market, an intervention by the Fed has a multiplier effect by which an increase in one bank's reserves, R, can lead to multiple deposits being created throughout the banking system.
Banca Promex's total loans (without Fobaproa's promissory note) decreased by 7% in 4Q96 compared to the previous quarter, due to the maturity of interbank loans
granted in 1995.
The interest rate on interbank loans
in foreign currency in December 2014 was 0.
The interbank loans
are cheaper and freely available in the market place as the 3- month Libor rate stood at 26 basis points by the end of last week.
After controlling for counter-party risk using the spread between unsecured and secured interbank loans
(Libor less the Repo rate), we found very little evidence that the TAF program has affected the spread.
On average, over one-third of the Saudi banks' assets can be considered liquid (in the form of cash, typically short-term interbank loans
Despite financial intervention from government, there seems to be a general unwillingness among lenders to provide mortgage finance priced in line with the sharp downward movements we have already seen in bank rate, the LIBOR rate on interbank loans
, and other money market rates.
Indicative of the problem, rates on overnight interbank loans
have recently shot skyward.
After the results, three-month interbank loans
were offered at a bid/ask spread of 4.
Northern Rock did make the serious mistake of relying on a stable, properly regulated market in interbank loans
- and on the regulators to do their jobs.
Under the pact, Singapore reserves the right to introduce temporary controls on short-term capital account transactions, such as portfolio investments and interbank loans
and placements, but not on current payments and direct investments, the Monetary Authority of Singapore said.