What is money market?

Money Market refers to trading in a very short-term debt investment. It mainly refers to the financial market where the financial instruments with high liquidity and short-term maturities are traded.

An individual may invest in the money market by purchasing mutual funds, or opening a money market account at a bank. The money market investments are characterized by safety, liquidity, and relatively low rates of return.

Governments or corporations use money market to keep their cash flow steady. The types of Money Market instruments are:

• Treasury Bills

• Certificate of Deposits

• Commercial Papers

• Repurchase Agreement

• Banker’s Acceptance

The main functions of the money market are:

• Financing Trade

• Central Bank Policies

• Growth of Industries and

• Commercial Bank’s Self-Sufficiency

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