New Definition of Money Market Could Transform Financial Landscape
The traditional definition of the money market as the market for short-term securities is outdated. The real starting point is the interbank debt market, where interest rates are set. The money market includes all short-term lending and borrowing, both direct and through financial intermediaries. Money creation, like new bank loans and deposits, is a key part of the money market. Therefore, a new definition of the money market is needed to reflect these realities.