Interbank Lending
Also called: interbank market, overnight lending, fed funds market
Interbank lending is banks lending reserves to each other, usually overnight, to manage day-to-day liquidity. The rate on it is the anchor for short-term rates across the economy. Its most important property is informational: when banks stop lending to each other, as in August 2007 and September 2008, it signals that they doubt each other's solvency, and it is the clearest possible crisis indicator.