What is a money market and why is it so important?
On its most basic level, the money market is where banks and individuals go in order to lend and borrow over the short-term. While there are larger markets dedicated to the long-term lending and borrowing of things like equity, the money market is dedicated to bailing out financial institutions in their times of short-term need. When a large bank or other financial institution needs short term liquidity, they head to the money market. Most financial trading happens with an eye on the long-term health of an investment, but these loans are not more than 13 months in most cases. Who are the players in this all important money market? As you might expect, the banks play a huge role in the investment proceedings. They trade with each other, giving each bank the liquidity that it needs in order to cover its obligations. They aren’t the only ones playing in this high stakes, short-term game, though. Local, state, and even the federal government gets involved in the money market, as they need
