Money market

Money market or money market. These are the markets in which short-term assets are traded (equal to or less than one year, although assets with longer terms can be traded). These assets have the characteristic of high liquidity and low risk. Due to the characteristics of its assets, it opposes the capital market.

Summary

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  • 1 Classification
  • 2 Main money markets
  • 3 Money market functions
    • 1 Main function
  • 4 Source
  • 5 External links

Classification

Within the money market we can find the following classification:

  • The Short Term Credit Markets: loans, discounts, credits, etc.
  • The Title Markets: in which liquid assets are traded from:
  1. From the Public Sector (Treasury Bills).
  2. Issued by companies (company promissory notes)
  3. Issued by the banking sector (interbank deposits, mortgage securities, etc.)

Main money markets

  • The interbank market ,
  • The currency market ,
  • The fixed income market and
  • The mortgage market .

Money market functions

  • Efficiency in financing decisions of economic agents.
  • Orthodox financing of the deficit by the State.
  • Achievements of economic policy objectives. The State uses the money market to achieve its economic policy objectives.
  • Adequate formation of the Temporary Structure of Interest Rates.

Main function

The main function of the money market is to provide the public and economic agents in general with the possibility of maintaining part of their wealth in the form of highly liquid securities or securities with an acceptable profitability.

 

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