Many foreign exchange novices will confuse the foreign exchange market with the money market. In fact, the foreign exchange market and the money market are two different feelings and have different functions. The foreign exchange market refers to a trading place that engages in foreign exchange transactions and regulates foreign exchange supply and demand internationally. Its function is to trade monetary goods, that is, the currencies of different countries. Money market refers to the market where financial assets are traded within one year.

Huicha made a simple summary of the difference between the two:

1, different market functions

Foreign exchange market: the function of the foreign exchange market is to realize the exchange of currency types and prevent the risk of exchange rate changes.

Money market: The function of money market is to finance the surplus and shortage of short-term funds.

2. Different currency types are used.

Foreign exchange market: In the foreign exchange market, foreign exchange transactions inevitably involve two currencies, such as the US dollar against the Japanese yen. In other words, the foreign exchange market is a place where various currencies are exchanged.

Money market: In the money market, the loan business usually involves only one currency, and both borrowers and borrowers use the same currency. ?

There are different ways to profit from banks.

Foreign exchange market: in the foreign exchange market, the profits of banks in foreign exchange business come from the exchange rate difference between buying and selling foreign exchange. The part where the selling price is higher than the buying price is the operating profit of the bank.

Money market: In the money market, the profit of short-term fund deposit and loan business of banks comes from the difference of deposit and loan interest rates. The part where the loan interest rate is higher than the deposit interest rate is the bank's operating profit.

4. Essential differences

Foreign exchange market: the foreign exchange market is a place or trading network for foreign exchange transactions.

Money market: Money market refers to the short-term capital lending market with a term of no more than one year, which is an integral part of the international capital market.

5. Different business structures

Foreign exchange market: The foreign exchange market consists of spot trading market, forward trading market and adjustment trading market.

Money market: Money market consists of three parts: short-term bank credit market, short-term securities market and discount market.