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 ?
And government money market funds, defined as investing a minimal 99.
Vanguard's Treasury Money Market Fund and Federal Money Market Fund currently invest more than 99.
This is why Sommariva believes that advisers to 401(k) plans will recommend that those plans replace their retail money market funds with government money market funds, "which provide higher credit and liquidity standards"-and are free of liquidity fees or redemption gates.
The amended rules allow-and in some situations require-nongovernmental money market funds, including retail funds, to: impose a fee on redemptions, also known as a liquidity fee, of up to 2% and to temporarily suspend, or "gate," redemptions for up to 10 days if weekly liquid assets fall below certain thresholds.
The average maturity of portfolios held by money market mutual funds was unchanged at 44 days.
The total amount of funds that banks are able to invest in all money market and fixed income funds has also been limited to 7.
ASIC conducted a systemic review of money market funds in Australia following these international developments.
Certificates of deposit and some money markets are protected up to certain limits by the Federal Deposit Insurance Corp.
It also averted potential lawsuits by [the money market funds'] shareholders and by [the taxpayer's] own shareholders.
Money market mutual funds fall into three categories: (1) general purpose, which invest in government securities and short-term bonds offered by banks and companies; (2) government-only funds that stick to U.
The affirmations of the money market fund ratings reflect the funds' extremely strong capacities to achieve their investment objectives of preserving capital and providing shareholder liquidity through limiting credit, market and liquidity risks.