FUNCTION OF MONEY MARKET

1. TRANSFERS TO LARGE SUM OF MONEY

 transfer large sum of money mean when individual what to send a large amount of
money abroad. The method that can used to make transfers bank to bank that the
individual take money directly from one account to another account and deliver it
to the recipience bank account. Therefore, it can minimize the costs and maximize
the amount to be received.

 banks will charge a different rate depending upon the currency in which money is
sent, for example so you might pay a higher fee if you send the money in Aussie
dollars rather than in your recipient’s local currency. If you want your money
transfer expedited, might incur yet another additional fee

2. transfers from parties with surplus funds to parties with deficit

 parties who have surplus fund and transferred to a lack of fund. For example,
these are tow parties, customer A and customer B. Customer A is surplus because
it has high income compare to customer B. Therefore, customer A transfer income
to save and invest in bank. However, customer B what to make a loan not directly
to customer A, but through the bank to improve its finance. Therefore, the bank
will transfer money to be borrowed from the customer A account to customer B
account.
3. Allow government to raise funds
 Fundraising or fund raising is the process of gathering voluntary contributions of
money or other resources, by requesting donations from individuals, businesses,
charitable foundations, or governmental agencies (see also crowd funding).
Although fundraising typically refers to efforts to gather money for non-profit
organizations, it is sometimes used to refer to the identification and solicitation of
investors or other sources of capital for for-profit enterprises.

 Traditionally, fundraising consisted mostly of asking for donations on the street or

at people's doors, and this is experiencing very strong growth in the form of face-
to-face fundraising, but new forms of fundraising, such as online fundraising,
have emerged in recent years, though these are often based on older methods such
as grassroots fundraising.

 Government collects money for something like Social Security and rather than put
it in a bank account, they spend it, leaving IOUs behind. This is really
government borrowing from itself. Social Security and Medicare were used for
this purpose. Help to implement monetary policy

4. Help to implement monetary policy

 Monetary policy consists of the process of drafting, announcing and
implementing the plan of actions taken by the central bank, currency board or
other competent regulatory authority of a country that determines the scope and
impact of the key drivers of the economic activity in that country. Activities
which are integral to monetary policy consists of management of money supply
and interest rates which are aimed at achieving macroeconomic objectives like
controlling inflation, consumption, growth and liquidity. These are achieved by
actions such as modifying the interest rate, buying or selling government bonds,
regulating foreign exchange rates, and changing the amount of money banks are
required to maintain as reserves.
5. Determine short-term interest rates
 Interest rate is the amount charged, expressed as a percentage of principal, by a
lender to a borrower for the use of assets. Interest rates are typically noted on an
annual basis, known as the annual percentage rate (APR). The assets borrowed
could include cash, consumer goods, and large assets such as a vehicle or
building.

 The interest rate is the cost of debt for the borrower and the rate of return for the
lender. Interest rates are applied in numerous situations where lending and
borrowing is concerned. Individuals borrow money to purchase homes, fund
projects, start businesses, pay college tuition, etc. Businesses take loans to fund
capital projects and expand their operations by purchasing fixed and long-term
assets such as land, buildings, machinery, trucks, etc. The money that is lent has
to be repaid either in lump sum at some pre-determined date or in monthly
installments, which is usually the case. The money to be repaid is usually more
than the borrowed amount since lenders want to be compensated for their loss of
use of the money during the period that the funds are loaned out; the lender could
have invested the funds instead of lending them out. With lending a large asset,
the lender may have been able to generate income from the asset should they have
decided to use it themselves. The difference between the total repayment sum and
the original loan is the interest charged.