Contents
Introduction…………………………………………………………………3
1. The General Economic Conditions for the Use of Money. Money and Money Substitutes………………………………………………..4
2. The Global Money Markets. US Money Market……………………9
3. Money Management. Cash Management for Finance Managers...17
Conclusion………………………………………………………………….23
Bibliography………………………………………………………………..25
Introduction
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.
Chapter 3 describes why LIBOR is the very important interest rate. This chapter covers agency securities. These securities are not typically backed by the full faith and credit of the U.S. government, as is the case with Treasury bills. However, short-term agency securities are considered safer than other money market instruments except U.S. Treasury bills. We describe the role of the Federal National Mortgage Association in U.S. money market. Also we tell about cash management. So, let’s start…
Chapter 1
The General Economic Conditions for the Use of Money. Money and Money Substitutes
All of us know that a word of "money" means. But not everyone knows why money uses. We shall try to look at money from other point of view in this chapter. First we shall stop on general economic conditions for the use of money, and then we shall tell about functions of money and money substitutes.
Where the free exchange of goods and services is unknown, money is not wanted. In a state of society in which the division of labor was a purely domestic matter and production and consumption were consummated within the single household it would be just as useless as it would be for an isolated man. But even in an economic order based on division of labor, money would still be unnecessary if the means of production were socialized, the control of production and the distribution of the finished product were in the hands of a central body, and individuals were not allowed to exchange the consumption goods allotted to them for the consumption goods allotted to others.
The phenomenon of money presupposes an economic order in which production is based on division of labor and in which private property consists not only in goods of the first order (consumption goods), but also in goods of higher orders (production goods). In such a society, there is no systematic centralized control of production, for this is inconceivable without centralized disposal over the means of production. Production is "anarchistic." What is to be produced, and how it is to be produced, is decided in the first place by the owners of the means of production, who produce, however, not only for their own needs, but also for the needs of others, and in their valuations take into account, not only the use-value that they themselves attach to their products, but also the use-value that these possess in the estimation of the other members of the community. The balancing of production and consumption takes place in the market, where the different producers meet to exchange goods and services by bargaining together. The function of money is to facilitate the business of the market by acting as a common medium of exchange. [1, p.26]
Indirect exchange becomes more necessary as division of labor increases and wants become more refined. In the present stage of economic development, the occasions when direct exchange is both possible and actually effected have already become very exceptional. Nevertheless, even nowadays, they sometimes arise. Take, for instance, the payment of wages in kind, which is a case of direct exchange so long on the one hand as the employer uses the labor for the immediate satisfaction of his own needs and does not have to procure through exchange the goods in which the wages are paid, and so long on the other hand as the employee consumes the goods he receives and does not sell them. ............
