Characteristics of Money Market

What are Money Market Characteristics-Frequently Asked Questions-Characteristics of Money Market

But if you have a money market account, you can get perks that you can’t get with a regular checking or savings account. Strongly encourage customers with substantial bank balances to open money market accounts. With a certificate of deposit, you have to leave your money alone for a few months before you can get it back. With this option, you can get your money whenever you need it. We will go over the characteristics of money market in detail in this article. To stay informed about disadvantages of money market subject, ensure to read more.

Before making a final choice, it’s in your best interest to learn as much as you can about money market accounts. A money market bank account is more like a checking or savings account than a money market mutual fund in terms of how it works. You can open this kind of account at any bank or credit union you want, and the process should be clear and easy to understand.

Characteristics of Money Market

People, companies, and governments use money market products for quick access to safe, liquid, and low-risk assets. There are many different kinds of money market products, but they all have some things in common. But “money market” deals only involve assets that will be worth less than a year. On the other hand, the money markets are often used to meet short-term needs for working cash, while the capital markets are used to raise money for long-term investments and operating costs. For your research and knowledge purposes, below is a list of characteristics of money market.

High-Level Trade

Because it is a market for big amounts of money or other financial assets, the total amount of trade has hit a record high.As a direct result of the increased freedom in the governing environment, people are always trying to come up with new tools.

Money Changer

It only deals with “liquid assets,” which are assets that can be quickly and cheaply turned into cash.There needs to be a strong secondary market for these products.

RBI’s Role

Third, there isn’t a big link between the shadow section of the money market and the way the central bank regulates things. The unorganized money market, not entirely under its control, limits the Reserve Bank of India’s ability to exercise full monetary flexibility.

Industry’s Function

There are many different banks that make up a money market. There are private banks, central banks, non-banking financial institutions, discount and acceptance houses, and other types of financial institutions. Most of the time, commercial banks are in charge of this part of the market.

Supply & Demand

There should be a lot of people who want cash assets and a lot of them available. It calls for a lot of business on both the national and foreign levels.


This market doesn’t really fit into any one category. There are a lot of very specific submarkets in the market for financing. Some of these are the Bill Market, the Acceptance Market, and the Call Money Market.

High Liquidity

Most business conversations happen over the phone or in person. Parties can send each other the required paperwork and letters at a later time. There is no central place, like a stock exchange, like there is in a capital market.

Meeting Spot

The way the market works in business institutions is similar to how the central nerve system works. They are a major player in the short-term lending market. No private banks would eliminate the necessity for a central bank or any other component of the money market.

Banking Structure

The word “near money” refers to a market where only short-term, liquid financial assets are traded.This action is only about managing financial assets that are due to be paid off in one year or less.

Cash in a Hurry

The second thing is that the Indian banking market is very competitive. Kolkata and Mumbai are India’s two most important business centers. The National Money Market is what these two markets are called when they work together. In spite of this, the National Money Market will grow to include both Delhi and Ahmedabad in the near future. It is possible to link the national money markets to the many area financial hubs.


First, the Indian money market is usually split in two. One side follows the model of commercial banking in the West or Europe, while the other side sticks to more traditional business practices. The Western and European business banking models have consistently influenced the Indian economy, causing this distinction. The link between these two markets isn’t very stable, though.


Each part of the economy has its own way of doing business. Over time, the part of India’s banking system that isn’t regulated has lost ground to the parts that are. Even so, it is an important part of how financial services are brought to rural places.


If Money Market Mutual Funds are so Safe, why doesn’t the Government Insure Them?

The federal government of the United States does not insure mutual funds. Mutual funds, which include money markets and other investment funds like bond and stock funds, are not qualified for a guarantee. Investors need to know everything there is to know about this subject.

Tell me about the Benefits and Drawbacks of having a Money Market Account

Money Market accounts have a higher interest rate on dividends than other types of bank accounts. Money market accounts lack FDIC protection if the affiliated bank faces bankruptcy, posing a significant drawback. This accounts are backed by short-term assets that are not completely risk-free but have a moderate level of security.

Do Money Market Accounts Carry any Risk of Loss?

In short, the answer is “no.” Many people think that money market accounts are the safest way to spend. Still, you need to make sure you’re following the rules set by your bank. If you go over your monthly transaction limit or your account balance drops below a certain level, you may have to pay extra fees.


If you need to borrow money for a long time, the best place to do it is from a stable money market. Large debtors can lower the cost of getting money by handling their short-term or extra funds well. A strong and busy money market is important for the growth of a country’s capital market, foreign exchange market, and derivative instruments market. Each of these markets needs the others to work. The money market makes assets more liquid, which helps the market for long-term loans. Without a strong money market, other markets, like those for government bonds and forward foreign exchange, can’t reach their full potential. In conclusion, the topic of characteristics of money market is complex and has a huge impact on many people.

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