Monday, September 15, 2014

Foreign exchange market

At the top level of the Foreign exchange market is situated what is named the interbank market, composed of the world's major banks,governments, etc. In the interbank market there is an exchange of buying and selling currencies between banks (unless absolutely necessary), but is a collection of knowledge from communication among the largest banks.

To understand this is example that was discussed in the forum Forex . Imagine an office with multiple PCs connected to each other forming a network. Each PC runs independently until a situation where a PC needs a resource located in another PC is not given; at this time the first PC will contact the second PC requesting access to the resource you need, get access only if the owner of the second PC has given authorization. Substituting the PC's resources by banks and foreign exchange can get an idea of the relationship between the participants in the interbank market.

Above each bank there is communication between the EBS network, a system that allows to know how much and at what cost are making transactions all members of the interbank market. The EBS, along with Reuters services, allowing each bank to offer a cost appropriately (even if everyone can put their funds freely) .


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