Characteristics of Money Market-What are the Characteristics of Money Market-What are Money Market Characteristics

Characteristics of Money Market

The majority of money market funds are a safe way to invest. They are concerned, however, because they do not have insurance. Money market funds are better for your brokerage account because of the flexibility they provide in capitalizing on business possibilities. Before determining where to deposit or how to spend your money, it’s critical to distinguish between these and money market accounts. We’ll look at the characteristics of money market and talk about the related topics in this area.

Money market accounts have several advantages that ordinary checking and savings accounts do not. Frequently, advisers urge the wealthy to invest their money in a money market account. You won’t earn as much as with a certificate of deposit, but your money will be there when you need it. To learn more about the differences between money market and capital market, read this article.

Characteristics of Money Market

Traders trade money-like assets in the money market. It is a trading platform for assets and money with maturities of one year or less. It’s not exactly the New York Stock Exchange. This is a phone call, not a meeting. The money market is critical to the smooth operation of the Indian banking system. The most important short-term assets with varied maturities on the money market include interbank call money, short-notice deposits, Treasury Bills with maturities of 91 and 364 days, commercial bills, certificates of deposit, and commercial paper. To learn more, take a look at these characteristics of money market.

The Market’s Role

The money market is made up of central banks, commercial banks, non-banking financial institutions, and discount and acceptance houses. Commercial banks are quite important in this market.

Short-term Funds

This market is for short-term capital or financial assets, sometimes known as “near money.” It is only applicable to assets having a payback period of less than a year.

The Rbi doesn’t have Much Control over the Unorganized Sector

Third, the central bank does not closely monitor the uncontrolled component of the money market. When uncontrolled money markets emerge, the RBI has a more difficult time being flexible with money and keeping track of it.

Banks that are very Well Organized

Commercial banks are the most important component of the money market as a whole. Short-term borrowers most often use them as sources. Commercial banks are critical in linking the Federal Reserve to the rest of the money market. Moreover, Liquidity is one of the key characteristics of the money market, allowing investors to quickly convert their investments into cash.

Funds on Hand and Wanted

Putting Food on the Table: An Art Form There must be a high demand for and ease of getting short-term loans. There is a lot of commercial activity both domestically and internationally.


Second, the Indian financial market is enormous. Kolkata and Mumbai are India’s two major financial centers. These two markets make up the National Money Market. However, the National Money Market currently covers cities such as Delhi and Ahmedabad. On a national and regional basis, there is a link between the money markets.


To begin, the Indian money market has traditionally been divided into two parts: a regulated sector that follows Western or European methods and an unregulated sector that follows indigenous ones. However, these two areas have very little in common.

Every business runs in its own distinct manner. In recent years, the unregulated portion of India’s currency market has lost ground. It does, however, contribute significant funding to rural communities.

Money Changes Hands

Evaluators only consider items with a low entry barrier to the cash market. These products should have a strong secondary market. The characteristics of money market provides short-term borrowing and lending opportunities, making it suitable for meeting immediate funding needs.

Wholesale Market

Here, traders trade a wide range of monetary and monetary-related commodities. Because there is more leeway in the regulation process, there is ongoing endeavor to make extra resources available.


There are numerous markets. There are many submarkets, each catering to a different type of investment capital. The bill market, payment market, and money market are all excellent examples.

No Place of Record

In the majority of commercial interactions, people utilize the phone to transmit critical documents and letters. A stock exchange is an example of a lawful marketplace where participants can buy and sell products and services. Besides, the characteristics of money market operates with a relatively low transaction cost, making it attractive to investors looking for cost-effective investment options.


Can a Money Market Account Make you Lose Money?

In fact, not at all. Anyone wishing to save money should consider opening a money market account. You should, however, confirm that you are in good standing with your bank. You may be charged if you make a certain amount of purchases per month or do not maintain a minimum balance in your account.

What is the Duration of “short-term” Securities for Money Market Mutual Fund Investments?

Money market mutual funds are prohibited from investing in stocks having maturities greater than 397 days from the date of purchase. Weekly Liquid Assets include cash, U.S. government obligations such as Treasury bills, certain other U.S. government agency debt issued at a discount and maturing in 60 days or less, and securities maturing or payable in 5 business days. Weekly Liquid Assets must account for at least 30% of the fund’s total assets. “Daily Liquid Assets,” which can include cash, US government direct obligations, or securities that mature or are due within one business day, must account for at least 10% of taxable funds’ total assets. The remainder of the fund’s holdings can be longer-term securities as long as the total weighted average maturity of the fund is 60 days or less.

Is a Money Market Account more Valuable than a Savings Account?

The deciding factor is what you want. Certain changes have occurred that you should be aware of. Increased premiums are one potential disadvantage of an MMA. With an MMA, you can usually issue cheques and use ATMs, making your money more accessible. (However, keep in mind that this may cause you to spend more than you would with a savings account). Finally, the maximum number of times an account can be used varies depending on the service and account. Speak with your bank about money market and savings accounts.

Final Words

We have taken a look at the characteristics of money market and discuss related matters in this topic. Passive money control is possible through repos and open market operations, which are more effective when the money market is liquid. This form of market responds more quickly to central bank interventions and is less prone to prejudice.

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