The Global Money Markets and Money Management

The purpose of our abstract is studying the global money markets and money as versions of the goods. In chapter 1 we cover general economic conditions for the use of money. The intent of this chapter is to introduce some of the functions of money. It is essential to understand these functions since the money markets carries out similar functions. Everybody use money and it is important to know «how it works».

Chapter 2 covers short-term debt instruments issued by some of the largest borrowers in the world—the U.S. Treasury and U.S. federal agencies. U.S. Treasury bills are considered among the safest and most liquid securities in the money market. Treasury bill yields serve as benchmark short-term interest rates for markets around the world. Another large borrower of short-term funds is a corporation using instruments such as commercial paper or short-term medium term notes. These instruments are the subject of this chapter too.

Chapter 2 describes short-term floating-rate securities. The term “floating-rate security” covers several different types of instruments with one common feature: the security’s coupon rate will vary over the life of the instrument. Approximately, 10% of publicly traded debt issued worldwide possesses a floating coupon. Floating-rate securities are the investment of choice for financial institutions whose funding costs are based on a short-term floating rate.

The activity of financial institutions in the money market involves an activity known as asset and liability management. We introduce the fundamental principles of asset and liability management in chapter 3. An appreciation of these concepts and tools is essential to an understanding of the functioning of the global money markets.