Inter Bank Loans (LIBOR, SOFR, SONIA, ESTR)

 Interbank Loans are very short term loans primarily over night loans between banks

Terms are short, however transactions are huge. Hundreds of Billions of dollars.

Variety of interest rates are associated with this Markets 

Fed Funds Rate : Rate at which US Banks can borrow from each other to full fill their Fed reserve requirements. This is a primary instrument for FED's monitory policy

LIBOR : London Interbank Offer Rate, has been around for sometime. It was a benchmark rate for Fixed Income securities for decades. However, with recent abuse it is being replaced by other rates.

SOFR : Secured Overnight Financing Rate (US Markets replacement for LIBOR)

SONIA : Sterling Overnight Index Average (UK Markets Replacement for LIBOR)

ESTR: Euro Short Term Rate (Euro Zone's replacement for LIBOR)

This market is very important to us, because it sets the short term interest rates for the entire Fixed Income.

It is also the market through which the Central Banks can exercise their monitory policy on the markets.

This the market where the Central Banks have the most control over and it is the conduit through which they can transmit their monetary policy to the economy.

Through this control they set interest rates for all short term markets.