Money Market Comparative Study

Occupying the core of modern market economy systems, financial markets are playing a more and more important role in allocating resources rationally. The level of development in financial markets, the degree of perfection of it and the efficiency of funds allocation in financial market determine the rationality and efficiency in resource distribution of the whole society. As an important part of financial markets, the money market is the foundation of the whole financial markets. And it operates as a pivot of the whole financial system. The development degree of money market not only indicates the level of a country's economy and finance, but also is significantly meaningful to the macro-economic regulation and control of the country , thus plays an awfully major role in it.The main functions of money market in financial systems of developed market economy countries lie in: Firstly, the rational short-term interest rate formed by the developed, effective money market serves as the Benchmark in interest rate systems of western countries, and becomes a reference rate for other financial instruments and financing funds. For example, the U.S.A. has been regarding the federal fund interest rate that is be formed by the federal fund market as the Benchmark of the country. Secondly, the money market offers a necessary channel and place for short - term financing of economic entities. It is also an important place where commercial banks manage liquidity and enterprises raise circulating funds, thus provides a safeguard for efficient operation of short- term funds and the effective raising of liquidity. Thirdly, the money market provides effective ways for the government to regulate and control macro-economy, especially for the monetary authority to carry out its monetary policy. For example, the Federal Reserve Board of the U.S.A. has been taking the benchmark rate as an effective way to regulate economy. Lastly, Long - term funds needed by economic construction can be offered through the effective operation and technology - dealing by financial institution in money markets.Different from the development rule of western financial markets, the development in China's money market has been lagged far behind. No matter as faras the overall scale and efficiency or as to running of every sub-market itself, there are big problems that seriously restrict not only their own efficiency of allocation in short-term funds, but also badly limit the coordinating development and optimization of funds allocation in the whole financial market. The un-equilibriums in both money and capital markets result in the disorder in funds flowing between them, and disturbs the normal operation of the whole financial market system and financial institution. Hence, to realize China's financial system reform from a complete plan - oriented to a market - oriented funs allocation system, the cultivation of money market is an extremely important reform measure. The urgent task of China's financial system reform is to cultivate the money market. The development of money market in western developed countries is relatively ripe. As the earliest financial center of the world in history, London makes the Britain money market an international money market with a relatively wide opening and strong internalization, and declares publicly the developing direction of the money market under the circumstance of financial globalization. The foundation of the U.S.A money markets is later than the Britain market. But with the quickest speed, it takes the lead to other countries in market scale and structure, at innovation in credit tools , at the conduct of monetary policies and the degree of freedom of the market, etc. These developments make American money markets become the most developed money market in the world. Though Japan kicked its step late in the money market, it developed comparatively fast and formed different currency market characteristics from the Britain and America's. Meanwhile, the money market of the NECs such as Singapore, Hong...