A market is where buyers and sellers come together, and transactions occur. The Market is a crucial factor in every economy, without which no economic system can exist. Inter Bank and Open Market are the most important forms of Market.
Main Difference
Inter Bank is such a factor of economy in which different banks exchange currencies of other countries. While Open Market refers to a business activity in which there are no barriers for people in business, they deal with their matters in their way. However, there are many differences between Inter Bank and Open Market. Let us discuss them.
What is Inter Bank?
Any economic unit where foreign currency exchange occurs is called Inter Bank. The exchange rate depends on the activities of Inter Banks. Inter Bank market is the superior marketplace for the sale of different currencies.
Moreover, Government controls the exchange rate of other countries in the Inter-Bank Market. Every Importer is directly related to an Inter Bank because foreign trade is made in Dollars, and all the payments are also in Dollars, so he visits the Inter-Bank Market to get dollars. There is no motive for earning for inter-bank.
Features
- Exchange of foreign currency
- Exchange rate management
- Control by State Bank
- Influenced by Govt. Decisions
- Foreign trade motive
What is Open Market?
Open Market refers to such a place where the exchange of foreign currency takes place without any barriers. All entrepreneurs are independent in their decisions. The Government cannot impact the Open Market and can control its exchange rate.
Open Market is a profit-based market which concerns only with profit. Moreover, Money exchangers in Open Market have their exchange rates.
Features
- No state barriers
- Free market system
- Free entry and exit for everyone
- No rivalry
- Equality of tax and subsidies
Key Differences between Inter Bank and Open Market
- Inter Bank exchange is controlled by the state, while merchants fix Open Market exchange rates.
- Interbank has a trading motive, while the open Market has a profit motive.
- Inter Bank exchange rate is state-controlled, while the Open Market exchange rate depends on demand and supply.
- Only authorized people can interact with Inter Bank, while there is no barrier to entry into the Open Market.
- In contrast to Inter Bank, Open Market does not fair any tariff implementation.
Comparison Chart Between Inter Bank vs. Open Market
| Feature | Interbank | Open Market |
| Control of State | Yes | No |
| Motive | Trade | Profit |
| Barriers | Yes | No |
| Exchange rate monitoring by | Government | Demand and Supply |
Conclusion
In a nutshell, we can say that Inter Bank and Open Market are pretty different. They have their features and control by their respective authorities. Interbank and Open Markets are the crucial types of markets.
