tailieunhanh - Lecture Retail and merchant banking – Lecture 7

After studying this chapter you will be able to understand: What is the name of apex banking institution in Pakistan? What is the main functions of SBP? Money market and financial services. | Revision of Lecture 7 1 Revision of Lecture 7 Q1: What is the name of apex banking institution in Pakistan? 2 Revision of Lecture 7 Q2: What is the main functions of SBP? 3 Lecture 8 4 Money Market and Financial Services 5 Money Market and Financial Services The money market is a key component of the financial system. It is a market for short-term funds with maturity ranging from overnight to one year, and includes financial instruments that are deemed to be close substitutes of money. 6 Money Market and Financial Services The money market performs three broad functions; Providing an equilibrating mechanism for demand and supply of short-term funds. Enabling borrowers and lenders of short-term funds to fulfil their borrowing and investment requirements at an efficient market-clearing price 7 Money Market and Financial Services The money market performs three broad functions; 3. Providing an avenue for the Central Bank intervention in influencing both quantum and cost liquidity in the | Revision of Lecture 7 1 Revision of Lecture 7 Q1: What is the name of apex banking institution in Pakistan? 2 Revision of Lecture 7 Q2: What is the main functions of SBP? 3 Lecture 8 4 Money Market and Financial Services 5 Money Market and Financial Services The money market is a key component of the financial system. It is a market for short-term funds with maturity ranging from overnight to one year, and includes financial instruments that are deemed to be close substitutes of money. 6 Money Market and Financial Services The money market performs three broad functions; Providing an equilibrating mechanism for demand and supply of short-term funds. Enabling borrowers and lenders of short-term funds to fulfil their borrowing and investment requirements at an efficient market-clearing price 7 Money Market and Financial Services The money market performs three broad functions; 3. Providing an avenue for the Central Bank intervention in influencing both quantum and cost liquidity in the financial system thereby transmitting monetary policy impulses to the real economy. The objective of monetary management by the Central Bank is to align money market rates with the key policy rate 8 Money Market and Financial Services There are three conditions required to be fulfilled for developing as well functioning money market. They are; 1. Banks and other financial institutions must be commercially motivated to respond to incentives, actively manage risk and maximise profit 9 Money Market and Financial Services The Central Banks must shift from direct to indirect methods of implementing monetary policy. The government must have a good mechanism of cash management, thereby giving the Central Banks greater freedom in setting their operating procedures. 10 Money Market and Financial Services Structure of Money Market: The structure of money markets determines the type of instruments that are feasible for the conduct of monetary management. In most other countries, commercial banks,