Legal Definitions - money market

The money market is a financial market where short-term financial instruments such as commercial paper, certificates of deposit, banker's acceptances, and U.S. Treasury securities are traded. It is a place where banks and other financial institutions trade these instruments.

For example, a company may need to borrow money for a short period of time to cover its expenses. It can issue commercial paper, which is a type of short-term debt, to investors in the money market. Investors who buy this commercial paper earn interest on their investment.

The money market is important because it provides a way for companies and governments to borrow money for short periods of time. It also provides a way for investors to earn interest on their short-term investments.