In terms of its structure, the money market includes the interbank lending market, bill discount market, short-term government bond market, securities repurchase market, etc.

The initial driving force for the emergence and development of the money market is to maintain the liquidity of funds. It connects fund demanders and fund suppliers with the help of various short-term financing tools, and Sun Jin cannot satisfy the demand for funds. The short-term capital needs of those who have more funds provide opportunities for profit from the temporarily idle funds of those with excess funds.

But this is only the superficial function of the money market. When the money market is placed in the context of the financial market and even the market economy, we can find that the function of the money market is far more than this.

The money market not only provides banks and enterprises with flexible management methods from a micro perspective, making them more convenient and flexible in the unified management of the safety, liquidity and profitability of funds, but also provides the central bank with The implementation of monetary policy provides means to regulate the macroeconomy and plays a huge role in ensuring the development of financial markets.

Market Type

This market can be divided into the following types based on different lending or trading methods and businesses:

Bank short-term credit market

It refers to international interbank lending and a place where banks provide short-term credit funds to industrial and commercial enterprises. This market was developed in the process of capital internationalization, and its function is to solve temporary short-term liquidity shortages.

The lending periods in the short-term credit market vary in length. The shortest is daily split, usually 1 week, 1 month, 3 months and 6 months, and the longest is no more than 1 year. The interest rate is based on the London Interbank Offered Rate (LIBOR). The transaction method of this market is relatively simple. Deposits and loans are made through telephone calls every day, and loans do not require guarantees.

The short-term credit market for banks in my country is concentrated in the National Interbank Lending Center in Shanghai. Its interest rate is called the Shanghai Interbank Offered Rate (SHIBOR), which is also known as China's LIBOR. Eight varieties are released: overnight, one week, two weeks, one month, two months, six months, nine months, and one year. The quotation banking group consists of eighteen large banks.

The short-term securities market

refers to the bills issued by industrial and commercial enterprises with good credit to raise short-term funds. It can be issued through banks with no limit to the face amount, and the term is generally 4 to 6 months. The transaction is carried out by discounting the face amount. Refers to commercial bills accepted by banks. Once a bill is accepted by a bank, its credibility is improved and it becomes easier to circulate. Because banks have higher credit, their liquidity is stronger than commercial acceptance notes. It refers to a place where short-term securities are issued and bought and sold. The term is generally less than one year. The short-term securities here include treasury bills, negotiable time deposit certificates, commercial bills, bank acceptance notes, etc. Their biggest feature is their greater liquidity and safety. There are many types of short-term credit instruments in various countries with different names, but in essence they are all credit instruments.