Money market
In general, trading in short-term (usually for up to twelve months; usually for less than one year) money on loan (overnight money, time deposits, short-term paper), with banks and the central bank being the main market participants. – In a narrower sense, the money market comprises trading in central bank deposits among banks. The conclusion of a single transaction generally involves larger amounts (several million euros). As a monopoly supplier of cash, this market offers the central bank the opportunity for targeted influence. Such money market transactions always serve the purpose of short-term investment; the money market thus ensures liquidity settlement between market participants. – In a special broader sense, the money market also refers to trading in money market paper. – The money market is sometimes also used to refer to the banks’ short-term customer relationships as a whole. In deposit-taking business, this refers to the collection of sight, time and savings deposits; in lending business, it refers primarily to current account loans (overdrafts). – See money squeeze, money market operations, money market rates, money market segments, short-term, Treasury bills, non-interest-bearing. – See Deutsche Bundesbank’s Annual Report 2005, pp. 24 f. (money supply management, overviews), ECB Monthly Report of February 2008, pp. 71 ff. (very detailed, textbook account of the money market in the euro area; many overviews), Financial Stability Report 2009, p. 98 (tasks, subsegments and participants in the money market), Deutsche Bundesbank Monthly Report of August 2010, pp. 26 f. (Money market management and liquidity needs), Monthly Report of the Deutsche Bundesbank of August 2011, p. 30 f. (Money market management and liquidity needs in the first three quarters of 2011), Monthly Report of the Deutsche Bundesbank of April 2014, p. 39 ff. (Money market management during the financial crisis: detailed explanations; overviews), Monthly Report of the Deutsche Bundesbank of August 2014, p. 31 f. (meaningfulness of the respective risk premium on the money market).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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