Money market



Money became a commodity

Money market became a component of financial market for assets involved in short term borrowing, lending, buying, and selling with original maturities of one year or less than that

Money market has higher liquidity ratio

Instruments


  • Treasury bills
  • commercial paper
  • certificate of deposit
  • bills of exchange
  • bankers acceptances
  • repurchase agreements
  • asset backed securities


Features

  • Liquidity - carry out shorter maturity period
  • Safety - strong credit rating
  • Discounted price - issued at face value


Objective

  • Helps in lowering short term deficits
  • helps central bank in regulating liquidity in the economy
  • helps development of capital market, trade, and industry
  • assists designing effective monetary policies
  • facilitates in streamlining functioning of commercial banks

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