AIMS, OBJECTIVES AND FUNCTIOS OF THE NIGERIAN MONEY MARKET

The Nigerian money market is part of the Nigerian financial market where short-term and liquid financial instruments are traded

It is the section of the Nigerian financial market where participants can buy and sell short-term instruments.

It is a market where liquid securities are bought and sold. It offers the participants ability to borrow and lend for a relatively short period.

The securities traded in the Nigerian money market are mainly "I owe you (IOU)" by large enterprises, governments, and financial institutions and they are extremely safe and liquid.

AIMS AND OBJECTIVES FOR THE ESTABLISHMENT OF THE NIGERIAN MONEY MARKET

1. The money market was established to provide the desired mechanism available for the government’s short-term financing needs.

2. It was established to efficiently mobilize resources required for investments purpose.

3. To indigenize the credit base by providing local investment outlets for the retention of funds in Nigeria as well as the investment of funds repatriated from overseas.

4. It was established to serve as lubricant for the central bank of Nigeria's (CBN) monetary policy, as Its establishment was deemed necessary for the effective implementation of the Nigerian government monetary policy.

ROLES AND FUNCTIONS OF THE MONEY MARKET

1. It serves as the foundation for the operation and execution of an effective monetary policy.

2. It provides the mean through which companies can finance short-term capital needs.

3. It reduces the number of cases of idle funds. For instance, commercial banks can use their excess reserves for profitable investment in the money market, reducing idle funds.

4. It provides a means of expanding and contracting credits in the country through its effect on monetary policy. More so, they also serve as means of expanding and contracting the money supply.

5. The money market stimulate economic development by providing funds to individuals, corporations, and the government 

6.  It is used to raise funds for the development projects of the government.

7. It provides safe means of investing as most securities like treasury bills are traded in the money market.

8. It increases the amount of liquidity available to businesses because businesses can easily borrow from the money market to meet short-term capital requirements.

9. The money market also serves as an intermediary, transmitting surplus funds from the surplus unit (savers) of the economy to the deficient unit (investor) of the economy.

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