Definition ∞ Interbank liquidity refers to the ease with which financial institutions can exchange funds with one another to meet their short-term obligations. This liquidity is crucial for the smooth functioning of the global financial system. In the context of digital assets, blockchain solutions aim to enhance this by providing more efficient and transparent settlement mechanisms. It represents the availability of funds for immediate transfer between banks.
Context ∞ The application of distributed ledger technology to interbank liquidity is a significant area of innovation in traditional finance. Projects often explore using wholesale central bank digital currencies or tokenized assets to streamline settlement processes. A primary discussion point involves how these new digital frameworks can reduce counterparty risk and improve the speed of large-value transactions.
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