What Is the Interbank Market?

The inter-bank market consists of the inter-bank lending market, bill market, bond market, foreign exchange market, and gold market. The inter-bank market has the functions of regulating currency circulation and money supply, regulating currency vacancies between banks, and maintaining and increasing the value of currencies of financial institutions.

Interbank market

Interbank market refers to the market for interbank transactions. Including: (1) the interbank foreign exchange market; (2) the interbank money market, that is, the interbank market.

Interbank lending refers to the conduct of short-term financial transactions between financial institutions with legal personality and branches of unincorporated financial institutions authorized by legal entities, with the purpose of adjusting positions and temporary fund surpluses. In the daily operations of financial institutions, due to changes in deposits and lending, and the increase and decrease in foreign exchange receipts and payments, at the end of a business day, there will be an imbalance in the revenue and expenditure of funds. Institutional expenditures are greater than revenues. Those with insufficient funds must integrate funds from those with excess funds to balance revenues and expenditures. As a result, the need for short-term mutual lending between financial institutions has arisen. Those who have insufficient funds to borrow money from those with insufficient funds are referred to as fund borrowing; those who have insufficient funds to lend funds to those with insufficient funds are called fund borrowing. Fund borrowing is greater than fund borrowing and is called net borrowing; otherwise, it is called net borrowing. This market for financial lending activities between financial institutions is called the interbank lending market, for short

The paper market (paper market) refers to the market for short-term financing through the issuance, guarantee, acceptance, discounting, rediscounting, and re-discounting of drafts, promissory notes and checks in the course of commodity transactions and capital transactions.

The bill market in the People's Bank of China's "Monetary Policy Implementation Report" refers to the sum of the actual number of discounts and rediscounts recorded in the business of commercial banks across the country, as well as specific information on the balance and accumulated balance.

A common bill market is: led by the head office of the People's Bank of China,

The bond market is a place for issuing and trading bonds, and is an important part of the financial market. The bond market is an integral part of a country's financial system. A unified and mature bond market can provide investors and fundraisers with low-risk investment and financing instruments; the yield curve of bonds is the benchmark for the return of all financial commodities in the social economy, so the bond market is also a transmission of central bank currency An important carrier of policy. It can be said that a unified and mature bond market constitutes a country's

The inter-bank foreign exchange market refers to the exchange market between the domestic and foreign financial institutions (including banks, non-bank financial institutions and foreign financial institutions) approved by the State Administration of Foreign Exchange to conduct foreign exchange business through the China Foreign Exchange Trading Center. The inter-bank foreign exchange market is gradually developing and improving.

Inter-bank foreign exchange market : domestic financial institutions (including Chinese and foreign banks and non-bank financial institutions) approved by the People's Bank of China and the State Administration of Foreign Exchange to conduct foreign exchange business through the China Foreign Exchange Trading Center Interbank foreign exchange trading system A market for trading between RMB and foreign exchange.

Forex : Foreign exchange has both dynamic and static meanings.

The dynamic meaning of foreign exchange refers to the international exchange behavior and process of converting one country's currency into another country's currency, that is, a specialized business activity to settle international creditor's rights and debt relationships.

The static meaning of foreign exchange refers to the financial assets expressed in foreign currencies that can be used for external payments. Article 3 of the "Regulations on the Administration of Foreign Exchange of the People's Republic of China" states: "Forex referred to in these regulations refers to the following means of payment and assets in foreign currencies that can be used for international settlement: (1) foreign currencies, including banknotes and coins; 2) Foreign currency payment vouchers, including bills, bank deposit vouchers, postal savings vouchers, etc .; (3) foreign currency marketable securities, including government bonds, corporate bonds, stocks, etc .; (4) special drawing rights; (5) other foreign exchange assets. . "

Exchange rate : It is the conversion ratio when the currencies of each country are exchanged, that is, the price expressed by the currency unit of one country by the currency unit of another country.

Benchmark exchange rate : The People's Bank of China announces the daily exchange price of RMB against the US dollar, Japanese yen, and Hong Kong dollar in the interbank foreign exchange market. The intermediate price is the exchange rate between the designated foreign exchange banks and between the designated foreign exchange banks and customers. The benchmark exchange rate for trading in RMB and HKD. Bank foreign exchange quotations: The designated foreign exchange banks use the RMB-US dollar benchmark exchange rate announced by the People's Bank of China as the basis, and according to the international foreign exchange market conditions, calculate the middle of the RMB against the US dollar, Japanese yen, and Hong Kong dollar freely convertible on the day. price. The designated foreign exchange bank may, within the fluctuation range of the exchange rate prescribed by the People's Bank of China, independently set the foreign exchange buying price, foreign exchange selling price, and cash buying price and cash selling price for each listed currency. These quoted prices are the bank's foreign exchange quoted prices.

Direct price method : Calculate how much domestic currency is payable based on a certain unit of foreign currency.

Indirect price method : calculate the amount of foreign currency receivable using a certain unit of the domestic currency as the benchmark.

Foreign exchange market : The market for currency trading and exchange is a place for foreign exchange trading activities composed of foreign exchange demanders, foreign exchange suppliers, and trading agencies.

Exchange rate system : refers to a series of arrangements or regulations made by a country's monetary authority for the basic way in which its exchange rate changes. Such as specifying the external value of the national currency, specifying the fluctuation range of the exchange rate, specifying the exchange rate relationship between the national currency and other currencies, and specifying ways to affect and intervene in exchange rate changes. Traditionally, the exchange rate system is divided into two types: the fixed exchange rate system and the floating exchange rate system. After 1973, the exchange rate system has become increasingly diversified. The IMF has re-divided the exchange rate system into two types: the pegged exchange rate system and the flexible exchange rate system. Including floating exchange rates.

Foreign exchange settlement and sales business : The foreign exchange settlement and sales system of banks began in 1994 with the reform of the foreign exchange management system. From January 1, 1994, the state abolished various foreign exchange retention, surrender and quota management systems, and implemented a system of bank settlement and sales of foreign exchange under the current account of domestic institutions. Under the bank foreign exchange settlement and sales system, foreign exchange settlement refers to the behavior of the owner of foreign exchange income to sell foreign exchange to designated foreign exchange banks, and the designated foreign exchange bank pays the equivalent of RMB according to the exchange rate of RMB on the day when the transaction occurs; The act of selling foreign exchange to foreign exchange users and collecting the equivalent of RMB according to the exchange rate of RMB on the date of the transaction. Forward foreign exchange settlement and sales business: refers to the designated foreign exchange bank and domestic institutions to negotiate forward foreign exchange settlement and sales contracts, agreed to handle foreign exchange settlement or sale of foreign exchange currency, amount, exchange rate and time limit; when due foreign exchange income or expenditure occurs, That is, the foreign exchange settlement or sales shall be conducted in accordance with the currency, amount and exchange rate specified in the forward foreign exchange settlement and sales contract.

Comprehensive position for foreign exchange settlement and sale : refers to the foreign exchange position held by a designated foreign exchange bank (hereinafter referred to as the bank) as a result of transactions between RMB and foreign currencies. Formation of business and participation in the interbank foreign exchange market.

Self-employed business (self-employed transactions) : The China Foreign Exchange Trading Center's market trading rules (provisional) stipulated by the China Foreign Exchange Trading Center on January 14, 1995 stipulated that self-employed business refers to members engaged in the normal conduct of their foreign exchange business Forex trading.

Agency Business (Agency Transactions) : The China Foreign Exchange Trading Center Market Trading Rules (Interim) issued by China Foreign Exchange Trading Center on January 14, 1995 stipulates that agency business refers to the spot foreign exchange transactions of members in providing foreign exchange services for enterprises : Spot foreign exchange transactions are exchange transactions in which two different currencies are exchanged at a mutually agreed rate, and are cleared after one or two business days. Forward foreign exchange transactions: means that the foreign exchange buyers and sellers sign a forward exchange transaction contract in advance, stipulating the currency, amount, exchange rate and future delivery time of the transaction, and the buyer and the seller will handle the settlement and settlement at the agreed exchange rate on the agreed maturity date. Forex trading.

Foreign currency trading business : refers to an arrangement in the interbank foreign exchange market that facilitates transactions and settlement between foreign currencies and foreign currencies of domestic financial institutions through electronic trading and clearing platforms. The foreign currency trading system introduced this time is a system that provides transactions and clearing for spot transactions of foreign currencies and foreign currencies, and does not involve RMB foreign currency transactions. Financial Derivatives: International Swap and Derivatives Association (ISDA): "Derivatives are bilateral contracts that involve swapping cash flows and are designed to transfer risk to traders. When a contract expires, the amount owed by the trader to the counterparty is determined by the underlying commodity , Securities, or index prices. "A derivative is a financial contract whose value depends on one or more underlying assets or indices. The basic types of contracts include: forwards, futures, swaps (swap), and options. . Derivative products also include structured financial products with one or more of the characteristics of forwards, futures, swaps (swap) and options.

Inquiry transaction : Inquiry transaction refers to a foreign exchange transaction subject that has a credit relationship with each other, and directly inquires and negotiates the currency, amount, exchange rate and future delivery time of the currency to be traded, and confirms the transaction method after reaching an agreement.

Auction trading : The trading system sorts the buying and selling quotes separately, and composes the transaction methods based on the principle of price priority and time priority.

Inter-bank foreign exchange market maker : With the approval of the State Administration of Foreign Exchange, when conducting RMB and foreign currency transactions in the inter-bank foreign exchange market in China, members of the inter-bank foreign exchange market are responsible for continuously providing market members with the obligation to provide buying and selling prices.

Financial institutions : refer to various types of Chinese-funded financial institutions and foreign-funded financial institutions (except insurance companies) established in accordance with the law in China.

Non-bank financial institutions : Chinese-funded trust and investment companies, financial leasing companies, finance companies, securities companies, insurance companies, and other financial companies that are established with the approval of the People's Bank of China and are registered in the People's Republic of China.

Foreign-funded financial institutions : The following financial institutions approved to be established and operated in China in accordance with the relevant laws and regulations of the People's Republic of China: banks with foreign capital headquartered in China; branches of foreign banks in China; foreign financial institutions Banks in China that are joint ventures between institutions and Chinese financial institutions; financial companies with foreign capital headquartered in China; financial companies in China that have joint ventures with foreign financial institutions and Chinese financial institutions.

Overseas branches of Chinese-funded financial institutions : Refer to the branches of non-independent legal persons established by Chinese-funded financial institutions overseas in accordance with local laws.

Members of the interbank spot foreign exchange market : banks, non-bank financial institutions or non-financial companies that meet the relevant conditions, submit written applications to the trading center, and are approved to engage in spot trading in the trading system provided by the trading center.

Balance of payments : refers to various economic transactions between an economy (usually a country or region) and other economies in the world within a certain period of time. One of these economic transactions is between residents and non-residents. Economic transactions as flows reflect the creation, transfer, exchange, transfer or reduction of economic value, including current account transactions, capital and financial item transactions, and changes in international reserve assets.

Current account : refers to the flow of real resources, including the import and export of goods, input and output services, external receivables and payable income, and the provision or acceptance of economics with other countries or regions without equivalent returns. Frequent transfer of value. Capital and financial items: Capital transfers under capital items, non-productive / non-financial asset transactions, and all other financial items that cause an economy's external assets and liabilities to change. Capital transfers refer to transfers involving changes in the ownership of fixed assets and reductions in creditor's rights and debts that result in changes in the asset stock of one or both parties to the transaction. They mainly include fixed asset transfers, debt relief, immigration transfers and investment donations. Non-productive / non-financial asset transactions refer to the purchase and abandonment of non-productive tangible assets (land and underground assets) and intangible assets (patents, copyrights, trademarks and distribution rights, etc.). Financial projects include direct investment, securities investment and other investment projects.

Inter-bank foreign exchange trading system : refers to the electronic system provided by trading centers (including the Shanghai Headquarters of China Foreign Exchange Trading Center, Beijing Backup Center and other sub-centers) for members to conduct foreign exchange transactions and fund clearing.

Foreign exchange transaction : refers to the spot transaction between RMB and foreign exchange.

Member : refers to a domestic financial institution approved by the trading center to allow it to engage in foreign exchange transactions in the trading system.

Spot foreign exchange transactions : Spot foreign exchange transactions are exchanged between two different currencies at the exchange rate agreed by the two parties, and cleared foreign exchange transactions are made after one or two business days.

Forward foreign exchange transactions : means that the foreign exchange buyers and sellers sign a forward exchange transaction contract in advance, stipulating the currency, amount, exchange rate and future delivery time of the transaction, and the buyer and the seller will handle the settlement and settlement at the agreed exchange rate on the agreed maturity date. Forex trading.

Inquiry transaction : Inquiry transaction refers to a foreign exchange transaction subject that has a credit relationship with each other, and directly inquires and negotiates the currency, amount, exchange rate and future delivery time of the currency to be traded, and confirms the transaction method after reaching an agreement.

Centralized bidding : Centralized bidding forex trading refers to the manner in which foreign exchange transactions are conducted between multiple trading entities in the market through a certain trading system or platform at the same time according to certain bidding rules. For example, the current transaction method of the Chinese interbank foreign exchange market is to conduct transactions according to time-first and price-first bidding rules.

Centralized credit granting : As a party, the organizer of the foreign exchange market grants certain transaction quotas to the participating transaction entities based on the credit of the transaction funds owned by each transaction entity. Each transaction entity also grants a certain amount of transactions to the central clearing department. Quota.

Bilateral credit granting : The behavior of the two parties in the foreign exchange market to directly grant each other a certain amount of credit for trading.

Bilateral clearing : After a foreign exchange transaction is concluded by a trading entity in the market, it does not go through a clearing institution, but directly remits funds to each other's designated account.