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".

Purchase in the money market

An efficient money market should be a market with breadth, depth and flexibility, with large market capacity, rapid information flow and low transaction costs. Trading is active and continuous, attracting many investors and speculators to participate. The money market consists of four sub-markets: the interbank lending market, the bill discount market, the negotiable large-amount certificate of deposit market and the short-term securities market.

The functions of the money market

In terms of its structure, the money market includes the interbank lending market, the bill discount market, the short-term government bond market, the 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.

Short-term financing function

Various economic actors under market economy conditions are objectively divided into those with surplus funds and those with insufficient funds, which can be divided into one-year periods. The above two categories of long-term capital surplus and shortfall and short-term capital surplus and deficit within one year, while the capital market (Capital Market) provides services for the supply and demand of medium and long-term funds, the money market (Money Market) serves seasonal and temporary conditions. Financing 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. Capital market, also known as "long-term financial market" and "long-term capital market". A place for various fund lending and securities trading with a term of more than one year. The trading objects in the capital market are long-term securities of more than one year. Because long-term financial activities involve long-term funds, high risks, and long-term stable income, it is similar to capital investment, so it is called the capital market. The Commercial Press' "English-Chinese Securities Investment Dictionary" explains: capital market capital market. One of the three components of financial markets. A market where long-term capital (i.e. stocks and bonds) is traded. Long-term capital refers to corporate debt and shareholders' equity - stocks, with repayment terms of more than one year, used for investment in fixed assets. It is in sharp contrast to the capital market that adjusts the surplus and shortage of funds of governments, companies or financial institutions. The capital market can be divided into the bank's medium and long-term credit market and the securities market according to different ways of financing funds. If classified according to the basic nature of financial instruments, the capital market can be divided into equity market and bond market. The former refers to the stock market and the latter refers to the bond market. The main certificates circulating in the stock market are company stocks. Shareholders who hold stocks, unless the company closes its business, only have annual dividend income as its equity assets and cannot have immediate claims on the company's assets. The basic characteristics of various debt instruments circulating in the creditor's rights market, including various bonds, commercial promissory notes, certificates of deposit, and loans, are that they have a certain term, a relatively certain rate of return, and the right to claim the full amount. Capital markets are that part of financial markets that include all institutions and transactions related to the supply and demand for long-term capital. Long-term capital includes part of the company's ownership such as stocks, long-term public bonds, long-term corporate bonds, large negotiable certificates of deposit for more than one year, real estate mortgage loans and financial derivatives, etc. It also includes long-term loan forms such as collective investment funds, but does not include Commodity futures. The capital market is a form of market, rather than a physical location. It refers to all the people, institutions and the relationships between them that trade in this market. Capital market insights are defined differently in terms of their details. Some financial scientists only regard transactions between certified objects as the content of the capital market, and separate loan transactions without certification into the loan market. Other financiers view both as capital markets. It is recognized that long-term capital is the difference between this market and other financial markets such as derivatives markets and currency markets. As an open and convenient place for public investment, the capital market has the function of converting social savings into long-term investment.

The restoration of the financing function of the capital market not only better meets the investment and financing needs of different market entities, but also effectively guides the flow of private funds to projects encouraged by policies and areas in line with national industrial policies, promoting investment, consumption, and exports. It has played an accelerator and booster role for the recovering Chinese economy. On the other hand, the improvement of the real economy has in turn provided impetus for the rise of the stock market. The continuous issuance and listing of new stocks has also provided new vitality to the market and provided external conditions for the reform, innovation and healthy development of the capital market. The two have formed a benign interactive.