Money Markets
Intermediate
What Are Money Markets?
Money markets are places where people and institutions trade short-term financial instruments. These instruments, like Treasury bills and certificates of deposit (CDs), typically mature in less than a year.
You can think of money markets as the go-to place for handling short-term borrowing and lending needs. They're all about providing liquidity and managing cash flow, helping governments, banks, and big businesses stay on top of their finances without taking on too much risk.
How Do Money Markets Work?
Money markets work by connecting those who need short-term cash with those who have some to lend. The key players are typically banks, large corporations, and governments. The whole point of money markets is to keep money moving smoothly through the economy and ensure everyone can access the funds they need without much hassle.
As such, we can summarize money markets in three key aspects: