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An interest rate is not only a proxy for credit risk but also is driven by demand and supply. If like here many banks request overnight money then the interest
by brewmarche 7y ago
An interest rate is not only a proxy for credit risk but also is driven by demand and supply.
If like here many banks request overnight money then the interest rate goes up (interest rates are just prices for money in the future quoted differently -- high price to the lender = low interest rate). The same market forces apply to the good "money redeemable in n days".