Definition ∞ Wholesale bank money refers to the funds held by commercial banks at a central bank, primarily used for interbank settlements and large-value transactions between financial institutions. This form of money is not accessible to the general public. It represents balances within the central bank’s accounts. Wholesale bank money plays a crucial role in the smooth functioning of the financial system.
Context ∞ The concept of wholesale bank money is highly relevant in discussions surrounding central bank digital currencies (CBDCs), particularly wholesale CBDCs. These digital forms of central bank money are being explored to improve the efficiency and security of interbank payments and securities settlement. The adoption of DLT for wholesale transactions could streamline processes and reduce counterparty risk. This modernization aims to enhance the existing financial market infrastructure.
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