The money market is a short-term capital market, which refers to a financial market with a financing period of less than one year. It is an important part of the financial market. Since the financial instruments accommodated in this market are mainly short-term credit instruments issued by the government, banks and industrial and commercial enterprises, which have the characteristics of short maturity, strong liquidity and low risk, they are placed above cash currency and deposits in the hierarchy of money supply. After currency, it is called "quasi-currency", so the market is called "currency market".

An efficient money market should be a market with breadth, depth and flexibility. It has large market capacity, rapid information flow, low transaction costs, active and continuous transactions, and can attract many investors and investors. Speculators participate. The money market consists of six sub-markets: the inter-industry lending market, the bill market, the large negotiable certificate of deposit market (CD market), the treasury bill market, the consumer credit market and the repurchase agreement market.

This market can be divided into the following types based on different lending or transaction methods and businesses:

Bank short-term credit market

It refers to the international banking industry inter-bank lending, and a place where banks provide short-term credit funds to industrial and commercial enterprises. This market was developed in the process of capital internationalization, and its function is to solve temporary short-term liquidity shortages.

The lending periods in the short-term credit market vary in length. The shortest is daily split, usually 1 week, 1 month, 3 months and 6 months, and the longest is no more than 1 year. The interest rate is based on the London Interbank Offered Rate (LIBOR). The transaction method of this market is relatively simple. Deposits and loans are made through telephone calls every day, and loans do not require guarantees.

The short-term credit market of banks in my country is concentrated in the National Interbank Lending Center in Shanghai. Its interest rate is called the Shanghai Interbank Offered Rate (SHIBOR), which is also known as China's LIBOR. Eight varieties are released: overnight, one week, two weeks, one month, two months, six months, nine months, and one year. The quotation banking group consists of eighteen large banks. [1]

The short-term securities market

refers to the bills issued by industrial and commercial enterprises with good credit to raise short-term funds. It can be issued through banks with no limit to the face amount, and the term is generally 4 to 6 months. The transaction is carried out by discounting the face amount. Refers to commercial bills accepted by banks. Once a bill is accepted by a bank, its credibility is improved and it becomes easier to circulate. Because banks have higher credit, their liquidity is stronger than commercial acceptance notes. It refers to a place where short-term securities are issued and traded. The term is generally less than 1 year. The short-term securities here include treasury bills, negotiable time deposit certificates, commercial papers, bank acceptance notes, etc. Their greatest characteristics are their greater liquidity and safety. There are many types of short-term credit instruments in various countries with different names, but in essence they are all credit instruments.

1. Treasury Bill

2. Negotiable certificate of deposit

3. Commercial paper

4. Bank acceptance bills

Discount market

It refers to the trading market formed by financing undue bills through discounting.