Throughout the course of a day, banks will transfer money to each other, to foreign banks, to large clients, and other counterparties on behalf of clients or on their own account. At the end of each working day, a bank may have a surplus or shortage of funds (or a shortage or
excess reserves in
fractional reserve banking). Banks that have surplus funds or excess reserves may lend them (often at a multiple of their legal
reserve ratio, if any) or deposit them with other banks, who borrow from them. The overnight rate is the amount paid to the bank lending the funds. Banks will also choose to borrow or lend for longer periods of time, depending on their projected needs and opportunities to use money elsewhere. Most
central banks will announce the overnight rate once a month. In Canada, for example, the
Bank of Canada sets a target bandwidth for the overnight rate each month of +/- 0.25% around its target overnight rate: the Bank of Canada does not interfere in the
overnight market so long as the overnight rate stays within its target band, but the Bank will use its reserves to lend or borrow in the overnight market to ensure that the overnight rate stays within its announced bandwidth. ==Measure of liquidity==