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Repurchase Agreement (Repo)

A repurchase agreement (repo) is a short-term secured loan. Lenders serve as collateral.

Interbank Deposit Placing

Interbank Placement of deposits between banks means that their bank’s money is more or less. If necessary, the period agreed with other partner banks. It means that they are held in mutual interest until the specified date is reached.

Interbank Money Market (Lending and Borrowing)

The interbank lending is a market in which banks lend funds to one another for a specified term. Most interbank loans are for maturities of short-term period. Such loans are made at the interbank rate.

Banks are required to hold an adequate amount of liquid assets, such as cash, to manage any potential bank runs by clients. If a bank cannot meet these liquidity requirements, it will need to borrow money in the interbank market to cover the shortfall. Some banks, on the other hand, have excess liquid assets above and beyond the liquidity requirements. These banks will lend money in the interbank market and earn interest on the assets.