Money market fund is a short-term securities investment in the money market. It is an alternative investment tool for savings and has become an important part of international investment funds. At the end of 2003, China money market fund was born, which was widely favored by investors and developed rapidly. Vigorously developing the Monetary Fund will have a positive and far-reaching impact on the micro, meso and macro levels of China's financial industry. 1. Enrich the variety of financial investment and consolidate the investor base According to the statistics of China People's Bank 200 1, the main product of personal financial investment in China is bank deposit, accounting for 7 1.6%, followed by stocks and bonds, accounting for about 20%. Obviously, the risk-return difference of this investment structure is too large, which is mainly caused by the unreasonable structure of existing financial investment products in China. In recent 10 years, although China's financial market has developed rapidly, compared with the development and changes of market demand, it still appears that investment varieties are single and investment tools are lacking. In the existing investment product structure of China's financial market, there is no transitional product between low-risk bank deposits and high-risk stock and bond products, resulting in product category vacancy. From the previous analysis of the characteristics of the money fund, we can know that it is a transitional product between the capital market and bank savings deposits, which can provide risks and benefits between the two. Therefore, the development of monetary fund is helpful to solve the problems of stability and transition of financial investment products in China, enrich the varieties of financial investment and gradually improve the structure of financial investment products. Second, improve operational efficiency and promote the development of the money market as the basic market of the financial system. Since the early 1980s, the marketization and monetization of China's economy have developed rapidly. Until the mid-1990s, the annual growth rate of money supply was much higher than that of GDP. Economic marketization and monetization have greatly increased the amount of money in circulation, making the function of money more powerful than ever before under the traditional system, and the role of money flow in resource allocation is becoming more and more obvious. However, the role of currency opponents in economic operation still depends on the effective currency flow mechanism, which depends on the development of a country's currency market. Although China's money market is developing rapidly, its development lags behind the whole process of financial system reform. China's financial system, mechanism and system are still greatly restricted by the backwardness of the current money market if they want to maintain effective operation and sustainable development and advance to an advanced level. Therefore, it is very necessary to accelerate the development of China's money market. In order to develop the money market, the following conditions must be considered: first, there must be many different types of market participants; Second, there must be rich money market tools for trading; Third, prices should be liberalized, that is, interest rates should be marketized and liberalized; The fourth is to have an optimized structure and level. Third, promote the benign interaction between the money market and the capital market and promote the development of the capital market. Money market and capital market are two components of a country's financial market, which complement each other, have their own unique functions and have natural capital communication links. Since China liberalized long-term bond and stock trading in 1980s, and formally established two stock exchanges at 1990, the development of capital market is obvious to all. The role of capital market in promoting the reform of enterprise property rights system, organizational model and operating mechanism, and optimizing social financing mechanism is becoming more and more obvious and the scope is becoming more and more extensive. However, the further development of the capital market needs the services of efficient securities financial intermediaries, which can communicate the supply and demand sides of the capital market, guide the wider public and institutions to participate and activate transactions, so that the capital flow can effectively promote the efficiency of resource allocation, and social savings can also be effectively transformed into investment. However, this requires that securities financial intermediaries have sufficient liquidity support, that is, flexible and broad financing space, and can easily and quickly obtain the required funds from the money market outside the capital market to support their primary and secondary market business, thus effectively promoting the smooth operation of the capital market. Therefore, in order to realize the sustainable development of the capital market and reach a new level, it is necessary to have the corresponding development of the money market as the supporting foundation, and there must also be smooth channels for effective connection between the money market and the capital market, so that social funds can flow fully and flexibly between the two markets. At the same time, the pricing of various instruments and the fluctuation of price level in the capital market must also have a reference basis, and a market benchmark interest rate must be formed, so that the pricing of various securities can be reasonable and the operation of the capital market can be reasonable; In other words, the formation of reasonable price mechanism in capital market depends on the marketization and rationalization of interest rate mechanism, and the formation of benchmark interest rate and reasonable interest rate mechanism also depends on the certain development of money market. 4. Prevent the concentration of risks in the banking system and resolve the risks in the financial system. In recent years, although China's financial market has developed rapidly and investors have gained considerable benefits from it, at the same time, the speculative and high-risk nature of the financial market has also discouraged many investors. Investors lack diversified investment varieties that can be used to spread risks, and many people have to put their funds into bank deposits. From a macro point of view, the reality of excessive concentration of funds into the banking system makes the overall risk of the national financial system more and more serious. According to statistics, by the end of 2002, the savings deposits of banks in China had exceeded 8 trillion yuan, and the difference between deposits and loans was also rising. This means that a large number of social funds are invested in commercial banks to earn interest income, and it also means that national financial risks are highly concentrated in the banking system, which is the financial risk of structural financial institutions with high risk coefficient. However, the inefficiency of China's banking system in capital allocation and the existence of huge non-performing loans make China's overall banking system bear both its own operational risks and the ultimate cost of the overall economic reform. Although there are various reasons for the increase in the difference between deposits and loans in the banking system, such as increasing the strictness of the loan review system in order to reduce non-performing loans, it is also related to the poor efficiency of enterprises (especially state-owned enterprises) under the current gradual reform environment in China. Even if this is a passive "lending", it is reflected in the continuous increase of savings deposits on the one hand, the poor flow of bank loans on the other hand, and the further concentration of financial risks in the banking system. At the same time,

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