Explain the role of money market in India.
Answers
Answer:
Money market is the force that brings equilibrium between demand and supply of loanable funds. This is done by allocating savings into investment channels. They lead to efficient distribution of liquidity among financial institutions, and hedging of short term risks.
Answer:
The money market performs three broad functions. Firstly, it provides an equilibrating mechanism for demand and supply of short-term funds. Secondly, it enables borrowers and lenders of short-term funds to fulfil their borrowing and investment requirements at an efficient market clearing price.
Explanation:
The broad objectives of the money market are to provide:
(a) An equilibrating mechanism for evening out short-term deficits and surpluses,
(b) A focal point for central bank intervention for influencing liquidity of the economy, and
(c) An access to the users of short-term money to meet their requirements at reasonable price.