Interbank

Generally speaking, the term "interbank" refers to any dealings between two banks. In the same way that interstellar travel is a trip between two stars...interbank is activity between banks.

More specifically, there's what's called the "interbank market," a currency trading platform used by financial institutions. It allows banks to tap into the forex market ("forex" being short for "foreign exchange").

You run a big multinational banking conglomerate. One day, a client of yours, a member of the British royal family, does well in one of the casinos in Monte Carlo. His winnings are all in euros, which he deposits in your Monte Carlo branch. He flies back to London that night, and the next day wants to withdraw the cash in British pounds to fund a shopping spree.

So...you've received a bunch of euros, but after a very quick turnaround, have to deliver the funds in pounds. Time to use the interbank market to make the currency switch.

The market can also be used for more speculative trading. A bank may want to hedge against currency or interest rate risk using the interbank market.