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Monetary Market


The social institution that arose from the relationship between sellers and buyers seeking to make exchanges or transactions is known as market .

Monetary , from Latin monetarius, is that pertaining or relative to the currency (the piece of gold or other metal used as a medium of exchange and, by extension, the bill, paper or legal tender).

He money market Therefore, it is a branch within the financial market where financial assets (certificate of deposits, promissory notes, etc.) are traded in the short term. Its purpose is to offer economic agents the option of transforming their wealth into securities or securities with a high degree of liquidity.

For example: “The multinational will go to the money market to get financing”, “The money market plays a very important role in the economy local".

The banks, the savings and the public administrations They are the main agents involved in the money market. Other participants are non-bank financial institutions, such as insurance companies.

Participation in the money market can take place through a direct relationship with the issuers of the assets or through specialized intermediaries (such as brokerage firms or banks). Among the reasons for investing in a money market can be mentioned security, high liquidity and flexibility.

The assets traded in the money market, then, are characterized by their low risk and his high liquidity . Within this market, it is possible to distinguish the of credit and the of titles (primary and secondary); Details are set out below.

Credit Market

It is an interbank market, with a great specialty in very short-term and wholesale operations. The negotiation of a deposit of money can have a minimum term of one day, and a maximum term of one year. This is the market in which the MIBOR, a kind of interest of offer used as a reference and belonging to the interbank market in Madrid.

On the other hand, the credit market is also responsible for carrying out the REPO operation, an agreement whereby the sale of a financial title is made (which is usually treasury bills), with the particularity that its seller assumes the commitment to repurchase it on a defined date and price at the time of the first transaction.

Stock Market

At first glance, the stock market can be divided into the following two types:

* primary: does not have a specific organization. The person issuing the securities sells them to receive resources in return;

* secondary: this, in turn, contains the stock Exchange (which allows the change of title ownership very easily) and the Annotated Public Debt Market, which is defined below.

Annotated Public Debt Market

The operation of the Annotated Public Debt Market is telephone, and its main function is the negotiation of debt public that is represented through book entries and securities whose issuance is in charge of public bodies, the Autonomous Communities and other national and international institutions that have authorization from the Ministry of Economy and Finance.

It is worth mentioning that, in this case, the securities are not presented in physical format, but simply consist of account entries made or managed by the State Debt Account Annotation Center, in charge of the Bank of Spain. It is responsible for issuing, amortizing and paying interest on the issue total titles and also to carry out the organization of the entire market.

Finally, its members include account holders and management entities; specialist agents and private investors cannot intervene in it.