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The Indian money market consists of diverse sub-markets, each dealing in a particular type of short-term credit. The money market fulfills the borrowing and investment requirements of providers and users of short-term funds, and balances the demand for and supply of short-term funds by providing an equilibrium mechanism.
The flow of money is shown with purple, and the flow of goods and services is shown with orange. Money flows in the opposite direction from goods and services. [1] Basic diagram of the circular flow of income. The functioning of the free-market economic system is represented with firms and households and interaction back and forth. [2]
The money market is a component of the economy that provides short-term funds. The money market deals in short-term loans, generally for a period of a year or less. As short-term securities became a commodity, the money market became a component of the financial market for assets involved in short-term borrowing, lending, buying and selling with original maturities of one year or less.
The central bank buys bonds by simply creating money – it is not financed in any way. [54] It is a net injection of reserves into the banking system. If a central bank is to maintain a target interest rate, then it must buy and sell government bonds on the open market in order to maintain the correct amount of reserves in the system. [55]
A money market fund (also called a money market mutual fund) is an open-end mutual fund that invests in short-term debt securities such as US Treasury bills and commercial paper. [1] Money market funds are managed with the goal of maintaining a highly stable asset value through liquid investments, while paying income to investors in the form of ...
Money within a money market account is insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration for up to $250,000 per person, per account.
Money market accounts at federally insured banks are very safe, as they are protected by the FDIC in the event that a bank fails. The FDIC insures up to $250,000 per depositor, per account ...
In Europe, although institutional investors have increased their market presence over the past decade, banks remain a key part of the market. Consequently, pricing is not fully driven by capital market forces. In the U.S., market flex language drives initial pricing levels. Before formally launching a loan to these retail accounts, arrangers ...