√ Understanding the Money Market, Objectives, Functions, Characteristics, Benefits, Actors, Instruments & Types of Transactions
Understanding the Money Market, Objectives, Functions, Characteristics, Benefits, Actors, Instruments & Types of Transactions – In this discussion we will explain about the Money Market. Which includes the definition of the money market, objectives, functions, characteristics, benefits, actors, instruments and types of money market transactions with a complete and easy to understand discussion. For more details, please read the review below carefully.
Understanding the Money Market, Objectives, Functions, Characteristics, Benefits, Actors, Instruments & Types of Transactions
Let's first discuss the meaning of money markets carefully.
Understanding the Money Market
The money market is a market that sells futures financial instruments. The money market has short term instruments, the term is often no more than one year making trading easier. The money market can also be called the Short Term Credit Market.
Another definition of the money market is a place or forum where fund owners (funders) meet with potential consumers (customers) either by meeting with directly or through an intermediary (Broker) in a request or supply transaction (Demand/Supply) for a number of funds or short-term securities below 270 days.
In short, the meaning of the money market is a place where parties who have excess funds meet and parties who lack funds in the short term.
Meanwhile, according to m Irsan Nasarudin, Money Market is a means that provides short-term financing (less than one year). The money market is not like the capital market which has a physical location, financing is based on loans.
Money Market Objectives
The objectives of the money market are:
Parties Who Require Funds or Capital
- To meet short term needs
- In order to fulfill liquidity needs
- To meet working capital requirements
- Currently experiencing loss
Parties Investing Funds or Capital
- To obtain income at a certain interest rate
- Helping parties experiencing financial difficulties
- Speculation
Money Market Functions
The functions of the money market are:
- Serves as an intermediary in buying and selling various short-term securities
- Used as a reservoir for funds from short-term securities
- Used as a source of funds or financing for companies to invest
- Serves as an intermediary for investors from abroad in channeling short-term credit to domestic companies.
Characteristics of the Money Market
The characteristics of the money market include:
- There is an emphasis on meeting short-term funds
- The money market mechanism is emphasized to bring together parties who have excess funds and those who need funds.
- Not tied to a particular place like the Capital Market
Benefits of Money Markets
The benefits of the money market are:
- Can be used to finance the real sector
- Can increase or increase ways to obtain short-term spending by issuing notes, commercial paper and similar short-term instruments.
- The government will have better information and opportunities to monitor credit needs in the national economy.
- Institutions that develop money markets and capital markets are growing.
Money Market Players
There are players in the money market, namely:
- Bank
- Foundation
- Pension fund
- Insurance company
- Large Companies
- Government agencies
- Other Financial Institutions
- Individual Society
Money Market Instruments
There are instruments or examples from the money market, including:
-
Money Market Securities (SBPU)
These are securities that are traded at a discount with Bank Indonesia or other financial institutions appointed by BI. -
Bank Indonesia Certificate (SBI)
These are securities in the form of short-term debt issued by the government -
Deposit
These are securities issued by the Bank against its customers' deposits which mature at a certain interest rate. -
Promissory Notes
Is a statement of ability to pay for short-term debt and receivable transactions between creditors and debtors. -
Treasury Bills
These are debt securities issued by the state that have a term of no more than one year. -
Banker's Acceptance
It is a money market instrument that can be used in export and import activities and in foreign exchange transaction activities. -
Commercial Paper
These are debt securities issued by a company to investors without any collateral. These are used to finance short-term obligations only. -
Call Money
Is a capital market instrument used in lending transaction activities of amounts of funds between banks in short-term periods.
Types of Money Market Transactions
The types of transactions in the money market are as follows:
-
Interbank Money Market
The Interbank Money Market is a type of transaction that transfers excess funds from one bank to another bank. -
Bank Indonesia Certificate (SBI)
Bank Indonesia certificates are securities issued by Bank Indonesia as the central bank. The purpose of BI issuing this certificate is to minimize/reduce money circulating among the public. -
Money Market Securities
Money Market Securities (SBPU) are securities issued by commercial banks which BI can only buy at relatively high prices. -
Certificate of Deposit
Deposit certificates are securities issued by the Bank with a certain nominal value as bearer documents. -
Foreign Exchange Market (Foreign Exchange)
The foreign exchange market is a place where someone can buy or sell foreign currency or exchange it for rupiah. The exchange rate exchanged is called the foreign exchange rate.
Thus has been explained about Understanding Understanding the Money Market, Objectives, Functions, Characteristics, Benefits, Actors, Instruments & Types of Transactions, hopefully it can increase your insight and knowledge. Thank you for visiting and don't forget to read other articles.
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