DEFINITION of 'Prime Bank'

Term used to describe the top 50 banks (or thereabouts) in the world. Prime banks trade instruments such as world paper, International Monetary Fund bonds and Federal Reserve notes.

BREAKING DOWN 'Prime Bank'

Be extremely wary when you hear this term. It is often used by fraudsters looking to give some legitimacy to their cause.

Prime bank programs often claim investors' funds will be used to purchase and trade "prime bank" financial instruments for huge gains. Unfortunately, these "prime bank" instruments often never exist and people lose all of their money.

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RELATED FAQS
  1. How does the Wall Street Journal prime rate forecast work?

    Learn about the Wall Street Journal's prime interest rate methodology. Discover trailing financial indicators, and engage ... Read Answer >>
  2. What should ordinary borrowers know about the prime rate?

    Learn more about how prime rates are used in consumer lending and how consumers may obtain better interest rates at or near ... Read Answer >>
  3. Why is it important for a business to understand prime costs?

    Learn what constitutes prime costs for businesses, and discover why companies need to understand prime costs in business ... Read Answer >>
  4. What's the difference between the prime rate and the discount rate?

    Learn more about the prime rate and the discount rate and how the Federal Reserve uses these rates in the U.S. economy. Explore ... Read Answer >>
  5. What do banks do to control the bank reserve?

    Understand what the Federal Reserve does in order to expand or contract the economy. Learn what depository institutions can ... Read Answer >>
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