Network of banks, discount houses, institutional investors, and money dealers who borrow and lend among themselves for the short-term (typically 90 days). Money markets also trade in highly liquid financial instruments with maturities less than 90 days to one year (such as bankers' acceptance, certificates of deposit, and commercial paper, and government securities with maturities less than three years (such as treasury bills, foreign exchange, and bullion. Unlike organized markets such as stock exchanges money markets are largely unregulated and informal where most transactions are conducted over phone, fax, or online. Long-term borrowing and lending markets are called capital markets. The money market is e short term debt market that deals with different money market instruments.
Market for Short-Term Debt Instruments-negotiable certificates of deposit, Eurodollar certificates of deposit, commercial paper, banker's acceptances, Treasury bills, and discount notes of the Federal Home Loan Bank, Federal National Mortgage Association, and Federal Farm Credit System, among others. Federal funds borrowings between banks, bank borrowings from the Federal Reserve Bank Window, and various forms of repurchase agreements are also elements of the money market. What these instruments have in common are safety and Liquidity. The money market operates through dealers, Money Center Banks, and the Open Market Trading Desk at the New York Federal Reserve Bank. New York City is the leading money market, followed by London and Tokyo. The dealers in the important money markets are in constant communication with each other and with major borrowers and investors to take advantage of Arbitrage opportunities, a practice which helps keep prices uniform worldwide.
The money market is a component of the financial markets for assets involved in short-term borrowing and lending with original maturities of one year or shorter time frames. Trading in the