Part II

• Money market accounts offer higher interest rates than a normal savings account, but there are higher account minimums and limits on withdrawals.
• The money market refers to trading in very short-term debt investments.
• At the wholesale level, the money market involves large-volume trades between institutions and traders.
• At the retail level, the money market includes money market mutual funds bought by individual investors and money market accounts opened by bank customers.
• The money market is often seen as cash equivalents that can be interchangeable for money at short notice.
• The money market provides short-term funds.
• The money market deals in short-term loans, generally for a period of a year or less.
• As short-term securities became a commodity, the money market became a component of the financial market for assets involved in short-term borrowing, lending, buying and selling with original maturities of one year or less.
• Trading in money markets is done over the counter and is wholesale.
• The money market is crucial for the smooth functioning of a modern financial economy.
• The money market allows savers to lend money to those in need of short-term loans and allocates capital towards its most productive use.
• The money market provides loans, often made overnight or for a matter of days or weeks, that are needed by governments, corporations, and banks in order to meet their near-term obligations or regulatory requirements.
• The money market allows those with excess cash on hand to earn interest.
• The money market is one of the pillars of the global financial system.
• The money market involves overnight swaps of vast amounts of money between banks and the government.
• The majority of money market transactions are wholesale transactions that take place between financial institutions and companies.
• Money market accounts offer limited rights to withdraw money or write checks against the account, and are subject to federal regulations.
• Money market accounts offer slightly higher interest rates than standard savings accounts, but the difference in rates between savings and money market accounts has narrowed considerably since the 2008 financial crisis.
• Average interest rates for money market accounts vary based on the amount deposited.
• Certificates of Deposit (CDs) are time deposit commonly offered to consumers by banks, thrift institutions, and credit unions, with terms of up to 10 years.
• Most certificates of deposit (CDs) are not strictly money market funds because they are sold with terms of up to 10 years, but CDs with terms as short as three months to six months are available.
• The commercial paper market is for buying and selling unsecured loans for corporations in need of a short-term cash infusion, with only highly creditworthy companies participating, so the risks are low.
• A banker's acceptance is a short-term loan that is guaranteed by a bank, used extensively in foreign trade, and serves as a guarantee that an importer can pay for the goods.
• The repo, or repurchase agreement (repo), is part of the overnight lending money market, where Treasury bills or other government securities are sold to another party with an agreement to repurchase them at a set price on a set date.
• Money market accounts and money market funds are considered among the safest ways to invest one's money, with low returns that may not keep pace with inflation.
• The money market involves the purchase and sale of large volumes of very short-term debt products, such as overnight reserves or commercial paper.
• An individual may invest in the money market by purchasing a money market mutual fund, buying a Treasury bill, or opening a money market account at a bank.
• Money market investments are characterized by safety and liquidity, with money market fund shares targeted at $1.
• Institutions that participate in the money market include banks that lend to one another and to large companies in the eurocurrency and time deposit markets; companies that raise money by selling commercial paper into the market, which can be bought by other companies or funds; and investors who purchase bank CDs as a safe place to park money in the short term.
• Money market instruments are often benchmarked to (i.e., priced by reference to) the London Interbank Offered Rate (LIBOR) for the appropriate term and currency.
• Trading companies often purchase bankers' acceptances to tender for payment to overseas suppliers.
• Retail and institutional money market funds, banks, central banks, cash management programs, merchant banks, and trading companies use the money market for financing trade.
• The money market plays a crucial role in financing domestic and international trade by providing commercial finance through bills of exchange, which are discounted by the bill market.
• The acceptance houses and discount markets help in financing foreign trade.
• The money market contributes to the growth of industries in two ways: they help industries secure short-term loans to meet their working capital requirements through the system of finance bills, commercial papers, etc., and industries generally need long-term loans, which are provided in the capital market.
• The short-term interest rates of the money market influence the long-term interest rates of the capital market, thus, money market indirectly helps the industries through its link with and influence on long-term capital market.
• The money market enables commercial banks to use their excess reserves in profitable investments.
• Developed money markets help commercial banks to become self-sufficient, in an emergency, when commercial banks have scarcity of funds, they need not approach the central bank and borrow at a higher interest rate, they can instead meet their requirements by recalling their old short-run loans from the money market.
• Money markets help central banks in two ways: short-run interest rates serve as an indicator of the monetary and banking conditions in the country and, in this way, guide the central bank to adopt an appropriate banking policy, and sensitive and integrated money markets help the central bank secure quick and widespread influence on the sub-markets, thus facilitating effective policy implementation.
• Money market funds are mutual funds that are offered by brokerages, investment companies, and financial services firms, they pool money from multiple investors and invest in high-quality, short-term securities.