What is the difference between an intermediary bank and a correspondent bank?

Answer 1

An intermediary bank is the bank who forwards the cash often because the original bank is a small bank that doesn't handle foreign payments.

It does not keep the cash, but simply assists in the transfer of funds.

The correspondent bank comes into play if the end recipient is located in a country where the currency transferred is not the native currency. For instance if you transfer USD to Laos. Then there will be a correspondent bank that covers all transfers to the Laos bank.

The end bank then has an account at the correspondent bank where it has all it's foreign currency covered.

Often (but not always) the correspondent bank will be a bank located in the country where the currency is native. For instance the USD correspondent banks will often be an American bank.