Interbank money market also just interbank market and wholesale market (interbank money market)
The trading of central bank money within banks. The purpose of this market is – to balance out unforeseen daily fluctuations (oscillations: fluctuations above and below a mean value) in the cash requirements of individual institutions, – to bridge foreseeable liquidity bottlenecks or central bank money surpluses in the future, and also – to finance longer-term positions with shorter-term contracts. Around one third of the loans of German banks are loans on the interbank market. – If this market shows signs of severe disruptions – as in the course of the subprime crisis, which has developed into an international financial crisis – this indicates a systemic crisis. In this case, banks distrust the solvency of their counterparties, ultimately the value of the assets reported on their balance sheets, whose precise assessment in terms of risk has become increasingly difficult as a result of the strong growth in the possibility of credit risk transfer since around 2000. – See bank money market, EURIBOR, guarantee funds, money market segments, trading system, alternative, collateral crisis, counterparty risk, credit risk, liquidity risk, role mixing, banking, subprime crisis, overnight money, trust, full allocation. – Cf. Deutsche Bundesbank Monthly Report of January 2000, pp. 49 et seq. (trends in interbank relations of German institutions), ECB Monthly Report of August 2003, pp. 48 et seq. (there also analysis of developments in the euro area and formulas for calculating the price), ECB Monthly Report of February 2008, p. 74 (mapping of transactions 2000 to 2007), BaFin Annual Report 2009, p. 27 (interbank market in the financial crisis; overviews) as well as the respective BaFin Annual Report, chapter “Economic Environment,” ECB Monthly Report of September 2010, p. 22 et seq. (breakdown of transactions in the interbank market since 2004; overviews), BaFin Annual Report 2010, p. 30 (current characteristics of the interbank market), Financial Stability Report 2010, p. 54 et seq. (risks in the interbank market).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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