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.

RELATED TERMS
  1. Prime Rate

    The interest rate that commercial banks charge their most credit-worthy ...
  2. Debt Instrument

    A paper or electronic obligation that enables the issuing party ...
  3. Term Federal Funds

    Balances purchased in Federal Reserve accounts for more than ...
  4. Federal Reserve Note

    The most accurate term used to describe the paper currency (dollar ...
  5. Prime Cost

    A business's expenses for the materials and labor it uses in ...
  6. Bank Discount Rate

    The interest rate for short-term money-market instruments like ...
Related Articles
  1. Personal Finance

    Explaining Prime Rate

    Prime rate is the interest rate banks charge their best (e.g. prime) customers.
  2. Investing

    Understanding Financial Instruments

    Financial instrument is a general term used to describe a monetary asset.
  3. Personal Finance

    The Role of a Prime Broker

    Understand the role of a prime brokerage, and learn about the services investment banks provide for hedge funds while in the role of being a prime broker.
  4. Investing

    Amazon Prime in Half of US Homes by 2018: Cowen

    Amazon's Prime service could be in 50% of US households by the end of the year, says Cowen & Co.
  5. Investing

    Introduction To Commercial Paper

    Commercial paper is a short-term instrument that can be a viable alternative for retail fixed-income investors looking for a better rate of return on their money.
  6. Investing

    How Points Relate to Financial Instruments

    Points usually refer to the measurement of some change in a financial instrument’s value.
  7. Insights

    What Do the Federal Reserve Banks Do?

    These 12 regional banks are involved with four general tasks: formulate monetary policy, supervise financial institutions, facilitate government policy and provide payment services.
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. Is the prime rate in the US different from the federal funds rate?

    Learn how the federal funds rate affects fluctuations in the prime rate and how following your bank's prime rate can help ... Read Answer >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. What are the most important interest rates?

    Learn about the most important interest rates in the economy; the Federal funds rate and discount rate are set by the Federal ... Read Answer >>
Hot Definitions
  1. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  2. Current Ratio

    The current ratio is a liquidity ratio measuring a company's ability to pay short-term and long-term obligations, also known ...
  3. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  4. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  5. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  6. Indirect Tax

    A tax that increases the price of a good so that consumers are actually paying the tax by paying more for the products. An ...
Trading Center