Money Market is a Market for trading in short-term loans
between banks and financial institutions. Participants in the money market
borrow and lend for the short term.
The short-term instruments in the Money
Market are inter-bank call money market, Treasury Bills (91 days and 364 days),
Certificates of Deposits, Commercial papers, Repurchase agreements and so on.
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Features of the
Indian Money Market:
The RBI is highly impacted by the functioning of the Indian
Money Market. Therefore, the efficiency of the Money Market is very important.
1.
It is through the Money Market that surplus
funds move to deficit areas. This helps in tackling temporary liquidity crisis
in the country.
2.
If the Money Market is not in sync with the RBI, the Central Bank may not
achieve its desired goals.
3. Government deficits are financed through
the Money Market in a non-inflationary way.
That’s why you can say that Money Market is a ‘barometer’ of
the Central Banking operations.
Read the Article | Features Of Indian Money Market
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