CHAPTER 8
INTERBANK AND EUROCURRENCY
The interbank market
Originally, the interbank market was defined as the market where banks lend to each other, in both the domestic and international markets. This is a rather strict (old-fashioned) definition, and increasingly, as well as banks, this group of lenders includes large industrial and commercial companies, other financial institutions and international organisations. Thus, the interbank market exists so that a bank or other large institution which has no immediate demand for its surplus cash can place the money in the interbank market and earn interest on it. In the opposite scenario, if a bank needs to supply a loan to a customer but does not have the necessary deposit to hand, it can ...
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