Money Market

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Money Market


a special sphere of the loan capital market, where capital is offered for short-term loans.

As a component part of the loan capital market the money market has all the typical features of that market. Thus, unlike markets where the objects of buying and selling differ according to their use value, the money market involves a depersonalized mass of monetary capital from which all traces of origin have been erased. The uniformity of the money market is a result of both the standard monetary form in which capital on the market acts as a commodity and the high level of concentration of supply of loan capital accumulated by the credit system. At the same time the money market, like the loan capital market as a whole, typically has numerous forms and methods of transferring capital to loans. The specific features of the transactions carried out on the money market result primarily from the short terms for which loan transactions are concluded: from one day to several months, occasionally up to one year. The primary reason for this is that loans on the money market facilitate the movement of the working capital, not the fixed capital, of the industrial capitalists. They turn to the money market primarily to convert capital from a commodity to a monetary form.

The money market is involved in a broad range of economic transactions: domestic and foreign trade (discounting bank acceptances and drafts, establishing a market for Eurodollars and European currencies), replenishing the monetary reserves of credit and financial institutions (inter-bank loans, rediscounting by a central bank), and making short-term loans to large industrial companies (the “commercial paper” market). It also includes financing stock transactions and servicing the state credit system. In terms of the spheres of the application of capital, the money market includes particular elements of fictional capital and the international currency market. Commercial and industrial firms, banks and other credit and financial institutions, stock speculators, and government institutions and agencies take loans on the money market. Capitalist banks (primarily the central bank and the system of deposit banks) act as the source of capital supply for the money market. Specialized credit and financial institutions (for example, insurance companies or savings institutions) operate primarily in the sphere of long-term credit.

The money market includes credit and settlement transactions by banks, clearing houses, the stock exchange, broker and dealer firms, ministries of finance, and other institutions. Many of the transactions of the money market are carried out orally over the telephone. The center of the money market is usually located in the business section of the main financial and economic point in the country (New York in the United States, London in Great Britain, Montreal in Canada, and Zurich in Switzerland). The interest rates charged for various transactions are an important index of the state of the money market.


References in periodicals archive ?
The Reserve Funds created "The World's First Money-Market Fund" in 1970, launching what has become a $2 trillion industry.
Reserve Insured Deposits (SM) is the first publicly-available money-market account to provide unlimited transactions, worldwide ATM cash access and the choice of 1% cash rebate or airline rewards earned on all purchases made with a Reserve VISA Gold Check Card," adds Mr.
Reserve Insured Deposits (SM) combines the best features of checking, savings and money-market accounts into one FDIC-backed account earning competitive money market rates on the entire balance.
an affiliate of The Reserve Funds, created Reserve Insured Deposits (SM), the financial community's first FDIC-insured money-market account with unlimited transactions, and yield comparable to a money-market fund.
com), based in New York, has more than $17 billion in assets, offering 17 money-market funds, seven no-load equity funds, and several innovative patented cash management products and services - including Reserve Return Sweep (SM) and Reserve Insured Deposits (SM).
It is expected to be attractive not only to distributors of mutual funds, but also to other institutions offering money-market funds, such as commercial banks and investment-banking firms.
Ruggieri, a Managing Director of Marsh & McLennan, said the new coverage will make money-market funds more appealing to investors by reducing a major fund risk.
This program will enable money-market funds to assure shareholders that they are insured against losses, up to the limits of the policies, due to the default of an issuer or issuers of securities held by the fund," he said.