DEFINITION of 'International Banking Facility - IBF'

A facility that allows depository institutions in the United States to offer deposit and loan services to foreign residents and institutions, while being exempted from reserve requirements imposed by the Federal Reserve and some state and local income taxes. Because of these exemptions, IBFs enable U.S. banks and U.S.-based financial institutions to compete more effectively for overseas deposits and loans business in the Eurocurrency markets.

BREAKING DOWN 'International Banking Facility - IBF'

While banks are permitted to conduct IBF activities from their existing offices, they are required to maintain separate books for their IBF business. The Federal Reserve Board of Governors approved the establishment of IBFs in the early 1980s. IBF operations remain under the jurisdiction of the Federal Reserve and other state and federal regulators.

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