We begin with the money market because it is the one in which we all have operated at one time or another. Anybody who has a checking account is a participant in the money that one person (or enterprise ) owes to another. In the case of currency , that is cash in your pocket, it is the government that owes the money to you as the bearer of the currency. In the case of a treasury bill it is also the government that owes an equivalent value to the owner of the bill. Here however a specified time has to elapse before the piece of financial paper - the treasury bill – becomes payable in hard cash by the government i.e before the date of the maturity of the document. In the first case , the government currency is actually money. In the second instance, the treasury bill is only near money. It would not be very hard to sell the treasury bill to another person. However the govt itself is not liable for the payment of the money represented by the bill until the instrument matures.
The bulk of the financial assets traded in the money market have a maturity of less than a year. However active trading is carried on in documents of up to 5 years maturity. Anything above 5 years is pretty much the domain of the investors in the capital markets where these longer term securities are traded.market. The article that is bought and sold in this market is “money” or “near – money “. Money or near-money is nothing more than financial paper representing a sum of money
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