Interbank market

The interbank market is the financial market where banks trade currencies with each other. It is the wholesale market for forex trading, and is made up of the largest commercial banks and investment banks. These banks will trade currencies with each other at an agreed upon rate, and the trading is done over the counter (OTC) which means there is no centralized exchange. The interbank market is the most liquid and efficient part of the forex market, and the rates at which currencies trade in the interbank market serve as a benchmark for the rest of the market and are extremely tight.