How does the interbank rate affect the liquidity of digital currencies?

1 answers

• Hemanth BheemasettiFeb 21, 2023 · 2 years ago
  The interbank rate is a key factor that affects the liquidity of digital currencies. When the interbank rate is low, it encourages banks to lend more money to each other, which increases the overall liquidity in the financial system. This increased liquidity can then flow into the digital currency market, making it easier for traders and investors to buy and sell digital currencies. Conversely, when the interbank rate is high, banks are less willing to lend, which reduces the overall liquidity in the financial system and can make it more challenging to trade digital currencies. Therefore, changes in the interbank rate can have a direct impact on the liquidity conditions in the digital currency market.
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