Money Markets: those Markets where instruments with short-term maturity and high liquidity securities are Traded, while in the latter the securities exchanged have medium- and long-term Maturity.
A collection of markets in which short-term maturity, high liquidity, and low risk financial instruments are traded that have characteristics very similar to (are substitutes For) money.
the main distinctive features of the money markets can be summarized as Follows: • Money markets includes a network of connected and interrelated markets. • In these markets, financial instruments with short-term maturity and high liquidity (precisely because of their short-term maturity and the existence of active Secondary markets) are traded. • The risk of traded securities is reduced by high creditworthiness of their issuers or Collaterals that are incorporated. • They are, in general, wholesale markets. • They tend to be direct, flexible markets and with a high degree of innovation
FUNCTIONS:) Monetary policy is implemented in the money markets and their existence Contributes to achieving its objectives. Monetary policy objectives are usually set In terms of growth of a representative magnitude of the quantity of money, or Certain levels of interest rates, or maintaining a certain value of exchange rate or Inflation rate.
-Money markets contribute to forming an appropriate structure of interest rates. This is possible because in these markets short-term interest rates are established Such that they can serve as a basis for fixing the structure of interest rates
-he efficiency of the financial decisions of economic agents may increase with the Information provided by the money markets. If the money markets work efficiently, They provide information that allows the different actors to know the market Situation
-) Money markets allow for the allocation of financial resources and funding. This last Function is somewhat obvious to every financial market, but sometimes not Specifically associated with money as they are often related to markets where Intermediaries do transactions with other intermediaries or individuals.
CLassification:Double, or buy-back transactions: When contracting parties simultaneously agree two Single transactions, a buy and a sell, one spot and the other forward or both forward. The buyer in the first transaction will be the seller in the second and vice versa
Single transactions: In which the transaction is one way only. Securities are sold along With all the rights attached: coupon payment, redemption value, etc. Debt is Considered transferred to maturity, allowing the new owner to transact in it freely on The secondary market under any authorised format.