Money market is the short-term financing market, the financing maturity is generally within 1 year, such as bill discount market, inter-bank lending market, short-term bond market, certificate of deposit market, repo market, etc.
1. Notes and Paper market Instruments used in the money market include commercial paper and banker’s acceptance notes;
The market for trading bills is called the bill market.
Commercial paper refers to unsecured short-term bills issued by financial companies or some enterprises with high credit ratings.
Commercial paper, which is produced by deferred payment in commodity trading, has the background of commodity trading.
However, commercial paper only reflects the resulting monetary obligation-debt relationship, not the content of the transaction.
Since the transaction has been completed and the commodity has been transferred, this is called abstraction or uncausation of commercial paper.
A large number of notes issued for financing purposes without a trading background are often referred to as financing notes.
In contrast to financing notes, notes with a commodity trading background are called authentic notes.
2. Central Bank bills Central bank bills, referred to as central bank bills or central bank bills, are short-term debt certificates issued by central banks to commercial banks.
The aim is to adjust the excess reserves of commercial banks.
A central bank bill is in effect a central bank bond.
They are called central bank bills to highlight their short-term nature.
Central bank bills mainly adopt repo transactions, divided into positive repo and reverse repo.
Repos are transactions in which the central bank sells securities to primary dealers and agrees to buy them back at a specified date in the future.
Positive repo is when the central bank withdraws liquidity from the market;
A reverse repo is a transaction in which a central bank purchases securities from a primary dealer and agrees to sell the securities to the primary dealer at a specified date in the future.
Reverse repos are when the central bank releases liquidity into the market.
3. Bill discount and discount market A basic feature of short-term bill financing is the advance payment of interest, that is, the party selling the bill into the capital is less than the face value of the bill, maturity at the face value of the repayment.
The difference is the interest paid to the buyer (lender) of the note.
This form of financing is called discounting, and its interest rate is called the discount rate.
4. Treasury Bill market Treasury bills here specifically refer to short-term Treasury bills issued by the government.
Maturity varieties include 3, 6, 9 and 12 months.
Treasury bills are also discounted securities issued at a set interest rate.
5. Negotiable Certificate of Deposit market Certificates of deposit are financial products issued by commercial banks and serve as certificates of deposit for depositors in banks.
Negotiable certificates of Deposit differ from ordinary certificates of DEPOSIT in that they have a maturity of not less than 7 days, are in round amounts, and are transferable before maturity.
The CD market is divided into issue market and secondary market.
Transferable certificates of deposit issued in the issuing market may be traded in the secondary market prior to maturity.
6. Repo Market The repo market refers to the short-term financing market for trading repurchase agreements.
A repurchase agreement is an agreement by which a seller promises to buy back a security if it is sold at a future date.
7. Interbank Lending market The interbank lending market refers to the short-term capital lending market between banks.
Market participants are commercial banks and other financial institutions.
The loan term is very short, including overnight, 7 days, 14 days, etc., and the longest is not more than one year.
The ups and downs of the pandemic dented risk appetite, the dollar strengthened gold fell, and oil prices fell more than 2%.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.
