Concept

Functions and Risks of Money Markets from a Market 's Perspective


From the market perspective the priority is to stabilize the banking system, finance sector and economy. The money markets also serve some more general functions beyond just serving the role-players. This is because the money market increases the amount of liquid capital within an economy, and in turn increases the stability of the banking system to the benefit of the whole finance sector and economy. This is because banks can borrow via the money markets and use these funds to avoid otherwise problematic liquidity problems. The money market is also important for central banks, who often use the web of connections from money-market transactions to apply regulations and enact their policies, such as maintaining interest rates at a certain level.

Edit | Delete | Back to List