DEFINITION of 'Interbank Call Money Market'

An interbank call money market is a short-term money market which allows for large financial institutions, such as banks, mutual funds and corporations, to borrow and lend money at interbank rates. The loans in the call money market are very short, usually lasting no longer than a week and are often used to help banks meet reserve requirements.

BREAKING DOWN 'Interbank Call Money Market'

The interbank call money market is a term used to refer comprehensively to a call money market for institutions. It is not exclusively used only by banks. Interbank call money market customers can include banks, mutual funds, large corporations and insurance companies.

Entities transacting within the interbank call money market seek short term loans. Loans typically have a duration of one week or less. Banks often use the interbank call money market to meet reserve requirements. Other entities use short term loans from the interbank call money market to manage various liquidity needs. Loans in the interbank call money market are typically transacted based on the London Interbank Offer Rate (LIBOR). Loans are transacted globally. The interbank call money market can include global participants with transactions across multiple currencies.

Various types of interbank money markets exist globally. The interbank call money market offers liquidity for a broader range of participants. An interbank money market can also be exclusively focused on banking entities. Interbank money markets typically involve short terms loans transacted across various currencies with multiple international participants. The interbank money markets are sources of short terms funds for banks and participants in the financial markets. Financial entities utilize these loan sources and rely on them when managing their capital and liquidity requirements. A lack of market lending in these market types was a factor in the 2008 financial crisis.

Call Money

Call money and call money markets in general are characterized by very short term loans. Call money loans typically range from one to fourteen days. They can include institutional participants such as in the interbank call money market. Other types of call money markets also exist. Brokerages may use call money markets to cover margin accounts. Call money rates are usually influential in the margin borrowing rates of brokerage accounts since call money serves as a source of funds to cover margin lending.

Call money loans typically do not have set repayment schedules since they are very short term loans ranging only up to approximately fourteen days. Thus, call money is used for very short term needs and is repaid quickly.

  1. Interbank Deposits

    In an interbank deposit, one bank holds funds on behalf of another ...
  2. Call Money

    Call money is money loaned by a bank that must be repaid on demand. ...
  3. Mumbai Interbank Offered Rate - ...

    The Mumbai Inter-Bank Offer Rate (MIBOR) is the interest rate ...
  4. Panel Bank

    The name given to the group of banks contributing to the Euro ...
  5. Big Figure

    Big figure is the stem, or whole dollar price, of a price quote. ...
  6. Money Market Fund

    A money market fund is a type of mutual fund that invests in ...
Related Articles
  1. Insights

    Forces Behind Interest Rates

    Get a deeper understanding of the importance of interest rates and what makes them change.
  2. Investing

    The Pros and Cons of Money Market Funds

    Find out the pros and cons of different money market funds and learn if investing in a one is right for you.
  3. Personal Finance

    5 Mistakes You're Making With Money Market Accounts

    Money market accounts can be helpful "parking spots" for investors. Here are five key things to keep in mind when opening an account.
  4. Personal Finance

    How Banks Set Interest Rates on Your Loans

    Are you planning on getting a loan from bank? Here is the information you need know on how banks set the interest rates to get the best possible deal.
  5. Retirement

    Introduction To Retirement Money Market Accounts

    Money market funds are used in retirement plans and accounts because they are liquid, stable and pay competitive rates of interest.
  6. Personal Finance

    Personal Loans: To Lend Or Not To Lend?

    Attempting to help a loved one with a cash loan can put a strain on your relationship - and your bank account.
  7. Personal Finance

    Getting a loan without your parents

    Do you want to receive a loan without the help of your parents? Use these five tips to finance your dreams without banking on a second signature.
  1. What is the difference between LIBID and LIBOR?

    LIBID and LIBOR are both benchmark rates set by banks in the London interbank market, referring to what banks are willing ... Read Answer >>
  2. What are the differences between the Federal Funds Rate and LIBOR?

    Learn the key differences between the federal funds rate and the London Interbank Offered Rate, including currency denomination ... Read Answer >>
Hot Definitions
  1. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  2. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  3. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  4. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  5. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  6. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
Trading Center