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Money Market

Money market is a market for short-term loans in the sense that it provides money for working capital or circulatory capital. It is  “collective name given to the various firms and institutions that deal in the various grades of near money.”

Money market is an institution through which surplus funds move to the deficit areas so that temporary liquidity crisis can be tackled. A well developed money market is good indicator of central banking operations. It enables the central bank to implement its monetary policy efficiently.

There are number of tools of money market and the most important short-term instruments are: inter-bank call money, short-notice deposits, Treasury Bills of ninety days to a year, commercial bills, certificate of deposits and commercial paper.


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