Money Market:
- Market Place where very short-term debt instruments are traded.
- Short term investment means investment in assets up to one year with high level of liquidity.
- The transactions in Money market can be at retail or wholesale level.
- At the wholesale level, it involves large-volume trades between institutions and traders while at the retail level, it includes money market mutual funds bought by individual investors and money market accounts opened by bank customers.
- The borrowing and lending in the money market is on unsecured basis.
- The RBI is the most significant constituent of Money market and the money market is also regulated by RBI.
Money market securities consist of following instruments:
- Call Money /Notice Money/Term Money
- Inter Bank Term Deposits
- Treasury Bills
- Commercial Bills
- Certificate of Deposits
- Repurchase Agreements (REPO)
- Collateralized Borrowing and Lending Obligations
- Tri Party Repo Dealing System
The money market plays a crucial role in financial stability, and with the rise of generative ai in financial services, institutions can analyze trends, automate trading strategies, and enhance risk assessments more efficiently. AI-driven innovations are truly shaping the future of finance. Great insights in this post!
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