Money Markets

Money markets are segments of the financial system where short-term borrowing and lending take place — typically for periods under 12 months.

They provide liquidity for banks, corporations, and governments to manage short-term funding needs and cash flow. Instruments traded in the money markets are generally low-risk and highly liquid, such as Treasury bills, commercial paper, certificates of deposit, and repurchase agreements (repos).

Interest rates in the money markets (like SONIA in the UK or SOFR in the US) are key benchmarks for wider financial markets.

Example:

A UK corporation with surplus cash invests £5 million in a 3-month Treasury bill, earning a small return while keeping funds accessible.

Used in:

Treasury management, central bank operations, short-term investment, and liquidity management for financial institutions and large corporates.