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
Good information.
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