1 | P a g e Money Market vs. Commodity Market - GK Notes for Banking & SSC Exams Topics including money market and commodity market have being frequently asked in many competitive exams. These are comparatively easier topics to understand and help in scoring better. Here we are discussing the main points to remember about money market and commodity market including their basic introduction, major participants and differences. Money market is a part of a financial market where short term borrowings can be issued. This kind of market includes assets that deal with short term borrowing, lending, buying and selling. Whereas, commodity market is a physical or virtual marketplace for buying, selling and trading raw or primary products. Read this article to know in detail about money market and commodity market. Money Market - An Introduction The money market is a key component of the financial system as it is the basis of the monetary operations undertaken by RBI to attain its monetary policy objectives. It is one of the primary mechanisms through which the Central Bank (RBI) influences liquidity rate and the general level of interest rates in the economy. This market is for short term funds with their maturity ranging from 1 day to 1 year and include financial instruments that are considered to be close substitutes of money. Instruments of money market have the characteristics of liquidity (quick conversion into money), minimum transaction cost and no loss in value.
2 | P a g e Functions of Money Market It functions as a wholesale debt market for low risk, highly liquid, short term instruments.
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