Money Market Functions The important functions of Money market are: Maintaining money related equilibrium i.e. to maintain a balance between supply of and demand for money for transactions that are done for a short period. Money market promotes the growth and development of the economy.
What are the advantages of call money market?
High Liquidity: Money lent in a call market can be called back at any time when needed. So, it is highly liquid. It enables commercial banks to meet large sudden payments and remittances by making a call on the market.
What are the 4 key functions of money?
whatever serves society in four functions: as a medium of exchange, a store of value, a unit of account, and a standard of deferred payment.
Which is an important function of the money market?
It is an important part of the financial system that helps in fulfilling the short term and very short term requirements of the companies, banks, financial institution, government agencies and so forth. It is a wholesale market, as the transaction volume is large.
What are the instruments of the money market?
Instruments of the capital market are shares, debentures, bonds and any other long-term security. Money market deals with foreign banks, Development financial institutions. Capital market deals with investment banks. Money Market is that portion of the financial system where short-term capital is issued for not more than one year.
How is the money market different from the capital market?
Money market is the market for short-term loanable funds, as distinct from the capital market which deals in long-term funds. Money market is also defined as a mechanism through which short-term funds are loaned and borrowed and through which a large part of the financial transactions of a particular country are cleared.
How does the government control the money market?
It acts as the guardian of the money market and increases or decreases the supply of money and credit in the interest of stability of the economy. It does not itself enter into direct transactions. But controls the money market through variations in the bank rate and open market operations.
