The money market is a trading market for short-term funds with a financing period of less than one year. It, together with the capital market, constitutes the core content of the financial market. In terms of its structure, the money market includes the interbank lending market, bill discount and acceptance market, short-term government bond market, securities repurchase market, etc. The initial driving force for the emergence and development of the money market is to maintain the liquidity of funds. It connects fund demanders and fund suppliers with the help of various short-term financing tools, which not only meets the short-term funding needs of fund demanders, but also provides funds The remaining temporarily idle funds provide opportunities for profit. But this is only the superficial function of the money market. When the money market is placed in the context of the financial market and even the market economy, we can find that the function of the money market is much more than this. The money market not only provides flexible management methods for banks and enterprises from a micro perspective, making them more convenient and flexible in unified management of the safety, liquidity, and profitability of funds, but also provides a platform for the central bank to implement monetary policies to regulate the macro economy. Provide means to play a huge role in ensuring the development of financial markets. Since the reform and opening up, our country has objectively adopted the development idea of ??"capital market first, then money market". On the one hand, this is due to a lack of understanding of the functions of the money market. On the other hand, the motivation for developing financial markets is not to improve the financial market. not only from the perspective of sustainable economic and financial development, but from the perspective of emergency relief. Since the reform and opening up, the most important factor restricting my country's economic development has been funding problems, especially long-term funding problems. Since it is long-term funds and permanent funds raised through the capital market, this problem can be solved. Therefore, capital The market has become the focus of the development of the financial market, while the development of the currency market has obviously lagged behind. Specifically, from a chronological point of view, our country started from the issuance of treasury bills (5-year terms) in 1981 to the issuance of stocks in the late 1980s, and in The two major stock exchanges of Shanghai and Shenzhen were established in 1991 and 1992. So far, it has been more than 20 years. The development of the capital market has been relatively mature. However, the earliest developed submarket of the money market, the interbank lending market, only existed in 1986. Only then has there been relatively obvious development, while the development of other sub-markets has lagged even further. Judging from the annual transaction scale, the lending market is in trillions, the bill market is in hundreds of billions, and the capital market is in trillions. From the development point of view, although the development of the stock market and the treasury bond market has had some ups and downs, it has generally shown a trend of stable development and continuous improvement, while the lending market has experienced ups and downs three times. It has only been developed in a standardized manner since 1999. The market is still in its infancy. Due to the serious lag in the development of the money market, it has objectively caused the "lame" phenomenon of the entire financial market, destroyed the coordinated development of the money market and the capital market, hindered the improvement of the financial market, and weakened its impact on the socialist market economy. promotion effect. Therefore, it is necessary for us to comprehensively analyze the functions of the money market, re-examine its role in the financial market and market economy, give the money market a due evaluation, and pay full attention to the development of the money market.

1. Short-term financing function

Various economic actors under market economy conditions are objectively divided into those with surplus funds and those with insufficient funds. They can be divided into one from the period perspective. There are two major categories: long-term fund surplus and shortage of more than 10 years and short-term fund surplus and shortage of less than one year. Compared with the capital market (Capital Market), which provides services for the supply and demand of medium and long-term funds, the money market (Money Market) serves seasonal, The financing of temporary funds provides a feasible way. Compared with long-term investment capital needs, short-term and temporary capital needs are the most basic and frequent capital needs of microeconomic actors, because short-term temporary and seasonal insufficient funds are due to the frequent daily economic activities. It is inevitable and frequent caused by nature. If this kind of capital gap cannot be made up, even simple reproduction of society cannot be maintained, or the commodity economy can only be kept at a primary level. The short-term financing function is one of the functions of the money market. Basic functions.

2. Management function

The management function of the money market mainly refers to prompting microeconomic actors to strengthen their own management and improve operating levels and profitability through the development of its business activities.

(1) The interbank lending market and securities repurchase market are conducive to improving the business operation level of commercial banks and realizing the goal of profit maximization

Interbank lending and securities repurchase are commercial Banks are the main channel for financing short-term funds in the money market. A fully developed interbank lending market and securities repurchase market can adjust the surplus and deficit of commercial bank reserves in a timely and appropriate manner, so that commercial banks do not need to maintain a large amount of excess reserves to cope with withdrawals or redemptions, thus making various available reserves available. It can be said to be "killing two birds with one stone" by making full use of high-yield assets. To this end, commercial banks must use scientific methods to manage capital liquidity, which brings commercial banks' asset and liability management to a new level.

(2) The bill market is conducive to profit-oriented enterprises to strengthen business management and improve their own credit levels

The bill market can be divided into a bill issuance market and a bill acceptance market in terms of bill behavior. The market and bill discount market can be divided into ordinary corporate bills and bank bills based on the issuing entities.

Only entities with good reputation and good operating performance are qualified to issue bills and be recognized and accepted by society in all aspects of issuance, acceptance, and discount. There are obvious differences in the rights and obligations of bills issued and accepted by entities with different credit ratings. , such as the interest rate, the liquidity of the bill, the amount of mortgage or pledge, etc. Therefore, companies trying to obtain short-term funding sources from the bill market must be companies with good reputations, and only companies with scientific management and excellent returns meet such conditions.

3. Policy Transmission Function

The money market has the function of transmitting monetary policy. As we all know, the central bank of a market economy country implements monetary policy mainly through the use of rediscount policies, statutory deposit reserve policies, open market operations, etc. to influence market interest rates and adjust money supply to achieve macroeconomic control objectives. In this process The Chinese currency market has played a fundamental role.

(1) The interbank lending market is an important channel for transmitting the central bank’s monetary policy

The central bank transmits monetary policy through the interbank lending market with the help of interbank offered rates and excess reserves of commercial banks. The influence of gold. First of all, the interbank offered rate is one of the interest rates in the market interest rate system that is most sensitive and directly reflects the central bank's monetary policy, and has become a "signal light" for changes in the central bank's monetary policy. This is because, in developed financial markets, interbank lending activities involve a wide range, large transaction volumes, and frequent transactions, and the interbank lending rate has become the basic interest rate for determining other market interest rates. Internationally, the method of determining interest rates by adding or subtracting the agreed range on the basis of the interbank offered rate has been formed. In particular, the London interbank offered rate has become an internationally accepted basic interest rate. Through the operation of monetary policy tools, the central bank first affects the interbank interest rate, and then affects the entire market interest rate system, thereby achieving the purpose of regulating the money supply and regulating the macro economy. Secondly, in terms of excess reserves, a developed interbank lending market will encourage commercial banks to maintain excess reserves at a stable level, which obviously creates good conditions for the central bank to control the money supply.

(2) The bill market provides the central bank with a carrier and channel for macro-control

The traditional concept is that the bill market is limited to clearing, and even the short-term financing function is often ignored. In fact, in addition to the above two basic functions, the bill market also provides an important vehicle for the central bank to implement monetary policy. First, the rediscount policy must be implemented in the bill market. Generally speaking, if the central bank raises the rediscount rate, it will shrink the bill market, and conversely, it will expand the bill market. At the same time, the central bank adjusts the rediscount rate in a timely manner through feedback from bill market information, and achieves the ultimate goal of monetary policy through changes in the intermediary goals of monetary policy. In addition, with the continuous improvement and development of the bill market, the stability of the bill market continues to increase, which will form a market price that is in equilibrium and changes freely with the market rules and is acceptable to both supply and demand. This is reflected in the capital price. Market interest rate is undoubtedly an important reference for the central bank's interest rate policy. Secondly, a variety of bills are one of the tools used by the central bank to conduct open market operations. By buying or selling bills to inject or withdraw currency, the central bank can flexibly adjust the money supply to achieve the ultimate goal of monetary policy.

(3) Short-term bonds such as treasury bills are the main tools used by the central bank to conduct open market operations

Open market operations have obvious advantages over deposit reserve policies and rediscount policies. It puts the central bank in an active position, its scale can be large or small according to macroeconomic needs, transaction methods and steps can be arranged at will, and it will not have a big impact on the money supply. At the same time, the concealment of its operations will not change people's psychological expectations, so it is easy to achieve the desired effect. However, conducting open market operations requires the central bank to have a considerable scale and a wide range of securities, of which Chinese bonds, especially short-term treasury bonds, are the main species. Because treasury bonds have excellent credit and strong liquidity, they adapt to the needs of open market business operations. At the same time, open market business operations mainly affect changes in the money supply in the short term. Therefore, there are more requirements for short-term bonds and bills. Therefore, Treasury bills with various maturities that are generally accepted have become the main tool for the central bank to conduct open market operations.

4. The function of promoting the development of the capital market, especially the securities market

As the core components of the financial market, the money market and the capital market are the material basis for the standardized operation and development of the latter. . First, a developed money market provides a stable and abundant source of funds for the capital market. From the perspective of capital supply, the level of funds provided by the surplus party ranges from short-term to long-term, from temporary to investment. Therefore, the money market has built a "fund pool" between fund suppliers and the capital market. The capital market Participants' essential short-term funds can be met from the money market, and funds withdrawn from the capital market can also find a way out in the money market. Therefore, the money market and the capital market are like a pair of "twin brothers" and neither side can be favored. Secondly, the healthy development of the money market reduces the impact on society caused by changes in capital supply and demand. The funds withdrawn from the long-term market have a way out, the impact of short-term hot money on the market has been greatly reduced, and speculative activities have been suppressed to the greatest extent possible.

Therefore, only when the money market develops and improves can the funds in the financial market be reasonably allocated. From the development process of financial markets in most developed countries in the world, it can be concluded that "money market first, then capital market" is the key to the development of financial markets. Basic rules.

It can be seen from the above analysis that the money market plays an important role in the healthy development of financial markets and market economies, and is the basic link for the normal operation of micro entities and macroeconomics. However, there are prerequisites for the normal functioning of the money market. The development and perfection of the currency market itself is the primary prerequisite for its functions to be exerted. For example, a developed interbank lending market requires a wide range of participants, frequent and extensive transactions, and market prices that follow the market; a developed bill market requires that the subjects of bill behavior must be real market economic actors with good credit, and the bill behavior must be legal Standardization; the formation of the treasury bill market requires that the treasury bills issued by the government reach a certain scale and have reasonable terms and grades. The existence of these conditions provides a good carrier for the function of the money market. Secondly, the functioning of the money market, especially the policy function, requires the development of other financial market sub-markets. In the performance of this function, the money market is actually the first to reflect the changes in the central bank's monetary policy and further affects the long-term financial market, that is, the capital market, and then affects a wider range of markets. This is because, under the conditions of market economy, changes in economic behavior caused by changes in interest relationships basically rely on money as a carrier. In this process, the money market and the capital market serve as the "second transmitter" and "third transmitter" respectively. hand" function. A developed market economy is the third condition for the functioning of the money market. The financial market itself is a product of the market economy. In a market economy, the government carries out macro-management of the market and microeconomic actors through indirect regulation. Microscopic entities become true "economic men" and "rational men", operating and operating in order to maximize profits and utility. Consumption and supply and demand have become the basic factors for price changes, and prices have become the basic signal for changes in resource allocation. A developed market economy itself not only requires a money market, but also provides a good external environment for the development of the money market.

Therefore, it can be easily concluded that the money market is the prerequisite for the healthy development of the financial market and market economy, and the improvement of the financial market and market economy provides conditions for the normal development of the money market. The three are A complementary unity. In this relationship, the money market plays a fundamental role. Emphasizing the capital market and neglecting the money market has weakened the basic role of the money market, causing market economic actors to lose the support of the short-term financing market. At the same time, it has destroyed the coordinated development of the money market and the capital market, resulting in a large number of money markets Market funds flow to the capital market. On the one hand, the currency market is shrinking due to lack of funds. On the other hand, the expanding capital market has accumulated too much short-term hot money, and the bubble component of the capital market has become increasingly obvious. Secondly, due to the extension of the above results, the link through which the central bank regulates the macroeconomy has been severed, which has greatly weakened the effect of the central bank's monetary policy. Getting to the bottom of things and fully understanding the basic functions and roles of the money market in the entire financial market and the market economy have practical and long-term profound significance for the improvement of the socialist market economy and the normal development of the financial market.