money market - Common money market instruments

In economic terms, the supply of and demand for money. In a free market, the increasing demand for money leads to pressure to raise interest rates. If the monetary authorities then raise these rates (in the UK through the Bank of England; in the USA, through the Federal Reserve Bank), the demand falls. The term also refers to the place where money is traded - banks, discount houses, and foreign exchange dealers (money brokers).

MONEY MARKET:

The money market is the financial market for short-term borrowing and lending, typically up to thirteen months. In the money markets, banks lend to and borrow from each other, short-term financial instruments such as certificates of deposits (CDs) or enter into agreements such as repurchase agreements (repos).

Common money market instruments

Bankers' acceptance - A draft or bill of exchange accepted by a bank to guarantee payment of the bill. Certificate of deposit - A time deposit with a specific maturity date shown on a certificate; Commercial paper - An unsecured promissory note with a fixed maturity of one to 270 days; Eurodollar deposit - Deposits made in U.S. dollars at a bank or bank branch located outside the United States. Federal Agency Short-Term Securities - (in the US). Short-term securities issued by government sponsored enterprises such as the Farm Credit System, the Federal Home Loan Banks and the Federal National Mortgage Association. Interest-bearing deposits held by banks and other depository institutions at the Federal Reserve; Repurchase agreements - Short-term loans—normally for less than two weeks and frequently for one day—arranged by selling securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. Treasury bills - Short-term debt obligations of a national government that are issued to mature in 3 to 12 months.