Money Market

The money market is created by a financial relationship between suppliers and demands of short-term funds which have maturities of one year or less. It exist because investors (i.e. individuals business entries, government and financial institutions) have temporarily idle funds that they wish to place in some type of liquid asset or short-term interest-earning instrument. At the same time. other entities/organisations find themselves in need of seasonal/ temporary financing. The money market brings together these suppliers and demands of short-term liquid funds. The broad objectives of -money market are three-fold:

An calibrating mechanism for evening out short-term surplus and deficiencies in the financial system.

A focal point of intervention by the central hank (e.g. Reserve Bank of India) intervention for influencing liquidity in the economy; and.

 A reasonable access to the users of short-term funds to meet their requirements at realistic/ reasonable cost and temporary deployment of funds for earning returns to ‘the suppliers of funds.

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