Money markets are used to facilitate the transfer of short-term funds from individuals, corporations, or governments with excess funds to those with deficient funds. Even investors who focus on long-terms securities tend to hold some money market securities. Money markets enable financial market participants to maintain liquidity. Money market securities are commonly purchased by households, corporations, and government agencies that have funds available for short-term period. Because money market securities have a short-term maturity and can typically be sold in the secondary market, they provide liquidity to investors. Most firms and financial institutions maintain some holdings of money market securities for this reason.
Advertisement
