Interbank Rate

The interest rate banks charge each other for short-term loans.

The interbank rate is the rate at which banks lend to one another, usually overnight, to manage their reserve requirements and short-term liquidity needs. It serves as a foundation for many other borrowing costs throughout the economy, since a bank's own cost of funds feeds into the rates it charges its customers.

When the interbank rate spiked during the crisis, banks grew reluctant to lend to each other at all.