It is a short-term capital market with a term of 1 year. For example, interbank lending, bill discounting, short-term bonds and negotiable certificates of deposit can all belong to short-term financial markets.
Money market refers to the market where financial assets are traded within one year. The main function of the market is to maintain the liquidity of financial assets in order to convert them into currencies that can be circulated at any time. Its existence, on the one hand, meets the borrower's short-term capital demand, on the other hand, it finds a way out for temporarily idle funds. Money market generally refers to the trading market of short-term credit instruments such as treasury bills, commercial bills, bank acceptance bills, negotiable certificates of deposit and repurchase agreements.
With the characteristics of short term, strong liquidity and low risk, it is called "quasi-currency" after cash currency and deposit currency in the level of money supply, so it is called "money market".
Corresponding to this is the capital market, which is usually called the long-term capital market. It refers to the place where securities financing has been operated for more than one year, also known as the medium and long-term capital market.
Financial market is the sum of supply and demand relationship and its mechanism based on financial assets, and its core is to realize the optimal allocation of financial assets through price mechanism. Simply put, the financial market is the market where financial assets are traded.
2. The market structure of short-term financial market.
An efficient money market should be a market with breadth, depth and flexibility, with large market capacity, fast information flow, low transaction cost and active and continuous trading, which can attract many investors and speculators to participate. The money market consists of six sub-markets: interbank lending market, bill market, large negotiable certificate of deposit market (CD market), national debt market, consumer credit market and repurchase agreement market.
3. Market types of short-term financial markets
According to different lending or trading methods and businesses, the market can be divided into the following categories:
(1) Short-term credit market of banks
Refers to international interbank lending and places where banks provide short-term credit funds to industrial and commercial enterprises. The market is developed in the process of capital internationalization, and its function is to solve the temporary short-term liquidity shortage.
(2) Short-term securities market
Refers to bills issued by industrial and commercial enterprises with good credit to raise short-term funds. It can be issued through a bank with unlimited par value, with a term of 4 to 6 months, and the transaction is conducted by discounting the par value.
(3) discount market
It refers to the trading market formed by discounting for the financing of unexpired bills. The main operator of the discount market is the discount company. Credit bills for discount transactions mainly include government treasury bills, short-term bonds, bank acceptance bills and some commercial bills. The discount rate is generally higher than the bank loan interest rate.