International Money Market

International Money Market

Introduction

The main purpose of this paper is to analyse different features of international money market. The paper discusses impact of globalization and international expansion of banks on international money market. With the passing time, international money markets are evolving. The main reason behind the evolution of international money market is its effective facilities for the money transactions. The international money market has facilitated borrowings, lending and conversion of currencies. Other main factors behind the evolution of international money market are globalization and expansion of banks. Thus, the paper provides a brief on the evolution of international money markets and the impact of globalization and bank expansion on international money market.

Discussion

Money markets are the markets for the transactions of financial assets. These are the markets facilitating transactions of overnight short term funds and instruments whose maturity period is less than one year. The money markets are both in domestic level and international level. The paper discusses the important features of international money market and the affect of globalisation and expansion of banks on the international money market (Casu, 2006).

International Money Market and Its Features

International money markets have been established for different functions mainly the lending and borrowing of moneys and making claims of money in different currencies outside the country. These international money markets are evolving with passing time and the most important money market is called Eurocurrency markets. Asian money market is also one of the biggest money markets. Thus, these markets prove that international money markets are establishing with a growing rate. The most frequently traded currency in these markets is US dollars; however, these international money markets also allow different other currencies to be traded. Thus, the need for money trading is increasing the importance of these international money markets and evolving with the passage of time. There are different reasons behind the evolution of money market and two most important reasons are globalization and expansion of banks. One of the important features of international money market is international money market fund ratings which are in shape of opinion of money market fund capacity for the purpose of assuring that principal is preserved and shareholder equity is provided (Chinn, 1995). Fitch's International Money Market is a very important concept which is mainly based on evaluation of multiple factors like maturity distribution of assets included in portfolio, credit, stability of shareholder base, market and liquidity risk. International money market fund rating is an important feature of international money market and is basically a reflection of opinions provided by willingness of fund's sponsors and ability to provide assistance to a fund through investment management oversight and other dedicated resources (Cetorelli, 2009). The main purpose of international money market fund ratings is to define the capacity which is used for preserving invested principal and providing shareholder liquidity as per the fund. Thus, the role of international money market funds ratings is very crucial in functioning of international money market (Hausler, 2005).

During past five years, there have ...