But did you ever wonder what precisely the money market itself is?
The money market is a financial exchange, an informal, electronically linked network of banks, brokerages, and dealers. These institutions come together to lend and borrow money for short periods of time anywhere from one night to one year.
Let s look more closely at how the money market works, what sort of investments it involves, and how individual investors can participate in it.
What is the money market?
The money market is a section of the financial market where highly liquid, short-term debt securities are created, bought, and sold. Borrowers tap the money market for their immediate financial needs and to fund their day-to-day operations. Lenders, on the other hand, use the money market so their spare cash can earn interest instead of sitting idly in a vault.