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 high has the prime rate ever gotten?

    Discover the highest value of the prime rate in United States' history and understand the assumptions and calculations that ... 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. How does the equity risk premium correlate with the Federal Reserve's prime rate?

    Learn about how the equity risk premium correlates with the Federal Reserve's prime rate. The Fed adjusts the prime rate ... Read Answer >>
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