What Is a High Yield Money Market?
The money market is a market where financial assets are traded within a period of one year. The main function of this market is to maintain the liquidity of financial assets so that they can be converted into tradable currencies at any time. Its existence, on the one hand, meets the short-term funding needs of borrowers, and on the other hand, finds a way out for temporarily idle funds. The money market generally refers to the market where short-term credit instruments such as Treasury bills, commercial papers, banker's acceptance bills, transferable time deposit certificates, and repurchase agreements are bought and sold. [1]
currency market
- The money market is a market where financial assets are traded within a period of one year. The main function of this market is to maintain the liquidity of financial assets so that they can be converted into tradable currencies at any time. Its existence, on the one hand, meets the short-term funding needs of borrowers, and on the other hand, finds a way out for temporarily idle funds. The money market generally refers to the market where short-term credit instruments such as Treasury bills, commercial papers, banker's acceptance bills, transferable time deposit certificates, and repurchase agreements are bought and sold. [1]
- 1. Low risk and low return
- 2. Short term and high liquidity
- 3. Large transaction volume
- An efficient currency market should be a market with breadth, depth, and flexibility. Its market capacity is large, information flows quickly, transaction costs are low, transactions are active and continuous, and it can attract many investors and speculators to participate. The money market is borrowed from the same industry,
- The market can be divided into the following types according to different lending or trading methods and businesses:
- Short-term credit market
- It refers to the inter-bank inter-bank lending and the short-term
- Participants in the money market refer to the various entities involved in trading in the money market. According to the purpose of their participation in the money market, they can be divided into the following categories:
- (I) Funders
- The demanders of money in the money market are mainly due to insufficient short-term funds or those who need more short-term funds for daily operations and want to obtain short-term funds through money market transactions. Such participants are mainly commercial banks,
- The bill market refers to the use of bills of exchange,
- Since the reform and opening up, China has adopted the development idea of "capital market first, then currency market" objectively. This is due to a lack of understanding of the function of the currency market. On the other hand, the motivation for developing the financial market is not to improve the financial market. Even the sustainable development of the economy and finance, but the emergency. Since the reform and opening up, the most important factor restricting China's economic development has been the problem of funds, especially long-term funds. Since it is the long-term funds and permanent funds raised through the capital market, this problem can be solved precisely. Therefore, capital The market has become the focus of the development of the financial market, while the development of the currency market has lagged significantly. Specifically, in terms of chronological order, China issued Treasury bills (5 years) from 1981 to the end of the 1980s. The two major stock exchanges of Shanghai and Shenzhen were established in 1990 and 1991. Until now, it has been more than 20 years. The development of the capital market has been relatively mature, and the earliest development of the money market submarket, the interbank lending market, was only until 1986. Only a relatively obvious development, the development of other sub-markets is even more lagging behind. Judging from the annual transaction scale, the lending market is trillions, the bills market is hundreds of billions, and the capital market is trillions. From the perspective of the development situation, although the stock market and the national bond market have experienced some ups and downs, they have shown a steady development and an increasing trend, while the inter-bank market has been in a turbulent fashion. Since 1999, it has developed in a standardized manner. The market is still in its infancy. Due to the serious lag in the development of the money market, it objectively caused the phenomenon of "legging" of the entire financial market, disrupted the coordinated development of the money market and the capital market, hindered the improvement of the financial market and weakened its influence on the socialist market economy. The driving role. Therefore, it is necessary for us to comprehensively analyze the function of the money market, re-examine its role in the financial market and the market economy, give the money market a proper evaluation, and pay full attention to the development of the money market.