Interbank Market

Summary of Interbank Market

A market for the purchase and sale in the spot and forward markets for foreign exchange among major commercial banks. Very often, these banks will offer to purchase or sell exchange through brokers, thereby initially protecting the identity of the market participants in a given currency at a point in time. Customarily, a bank or broker will approach a potential transaction partner looking to make a market, i.e., stand ready to buy or sell a given currency. Quotes are usually given as a two-way price, the rate at which the bank is prepared to buy and sell a given currency. The difference between the bid (the price at which the bank would buy) and the offer (the price at which it would sell) is the spread.

(Main Author: William J. Miller)

Hierarchical Display of Interbank market

Finance > Monetary economics > Money market