Money market plays an important role in the operation of American national economy. The center of the money market is in new york, and a "telephone market" is formed by the developed telecommunication system. Government agencies, commercial banks, non-bank financial institutions and foreign financial centers all over the United States can easily participate in the transactions in this market. Among the market players, the Federal Reserve System of the United States is the most important one. As the central bank of the United States, the Federal Reserve serves monetary policy through the open market trading platform established by the Federal Reserve Bank. In addition, the Federal Reserve also participates in market operations as an agent of official foreign institutions and the US Treasury. New york's money market includes federal funds market, time deposit certificate market, national debt market, commercial paper market and money market mutual funds.
(1) Federal funds market.
The federal funds market, also known as the overnight interbank lending market, is a market where American financial institutions lend to each other and deposit their reserve assets in the Federal Reserve Bank. According to the law, all financial institutions in the United States must deposit a certain proportion of deposit reserve with the Federal Reserve Bank to prevent credit expansion caused by excessive lending activities of financial institutions. The reserve account deposits of financial institutions in the Federal Reserve Bank and the debt funds deposited in the member banks of the Federal Reserve constitute the federal fund. The provisions of the Federal Reserve Bank on the amount of deposit reserve of financial institutions depend on the increase or decrease of their deposits. Because the daily deposit balance of each bank is different, their statutory reserve amount will change accordingly. Some banks have insufficient reserves, while others have excessive reserves. In order to adjust the surplus and shortage of funds, financial institutions can borrow from each other, thus forming a federal fund market. The federal fund market was formed in new york in the 1920s. Its original purpose is to adjust the surplus and shortage of deposit reserve among a few members of the Federal Reserve system who participate in federal fund transactions. At present, market transactions have gone beyond the original intention of traditional capital regulation, and federal funds have become one of the important sources for financial institutions to obtain stable short-term funds. In addition, due to the intervention of foreign banks, the federal fund market has become an important place for the World Bank to borrow (release) funds, thus further improving the international status of the New York financial market.
(2) Time deposit certificate market.
Certificate of deposit is a financial tool for commercial banks and financial institutions to absorb large time deposits, and it is a breakthrough financial innovation. Because American commercial banks are not allowed to pay interest on embedded deposits, depositors often withdraw their deposits to invest in treasury bonds or other securities in order to obtain income, which leads to a serious loss of bank deposits and affects the development of credit business. In order to attract more deposits, new york First National City Bank issued the negotiable certificate of deposit for the first time in 196 1. Because of its large denomination, fixed term and interest rate and free transfer, it is an ideal short-term investment choice. After the CD came out, it was welcomed by investors and became an important short-term capital trading tool in major financial centers around the world.
(3) the national debt market.
Treasury bills refer to short-term bonds issued by the US federal government. They are the most important tools in the money market and in the process of federal debt management and monetary policy implementation. The important characteristics of national debt are no default risk, strong liquidity, small denomination, easy investment and exemption from national and local income tax. The national debt market is divided into primary market and secondary market. The U.S. Treasury Department issues treasury bills in the primary market to make up the fiscal deficit, while the U.S. Federal Reserve Bank achieves the predetermined monetary policy goal and controls the currency circulation by buying and selling treasury bills in the secondary market. The secondary market of national debt is a market where transactions are conducted by telephone, and dozens of securities firms support the development of transactions by holding and purchasing national debt themselves. An important trading method is to use the securities repurchase agreement to sell government bonds to companies and other lenders, and after a certain period of time, repurchase certificates and bonds at the same price plus the interest rate stipulated in the agreement to obtain profits.
(4) Commercial paper market.
Commercial paper is a short-term promissory note issued by financial companies, industrial and commercial enterprises and companies to raise working capital. In recent years, it has been regarded as an effective alternative to short-term bank loans. There are two types of commercial and industrial bills: financial bills and industrial bills. Financial bills are issued directly to lenders and investors by financial companies and bank holding companies. The former is for their consumption.
Industrial and commercial credit provides funds, and the latter mainly finances activities related to banking, such as leasing, mortgage and consumer credit.
(5) Money market mutual funds.
Money market mutual fund is an investment company with variable capital, which specializes in short-term money market instruments investment. This is the most widely used investment organization method in the "short-term joint investment arrangement" that has appeared since the 1970s. It is suitable for small and individual investors to make short-term money market investments below $65,438+00,000 (sometimes only $500). By buying shares in money market mutual funds, investors entrust their funds to money market mutual funds, which invest their funds in money market instruments. As a joint-stock investment institution, money market mutual fund absorbs some characteristics of joint-stock financing operation. For its investors, it can use the experience of full-time managers to indirectly invest in money market tools.