Redefining the Money Market

The money market has traditionally been defined as the market for marketable short-term securities. It has deep historical roots. Today, it is not an illuminating definition. The genesis of interest rates, which is the quintessence of monetary policy implementation, does not originate in market for marketable short-term securities. It is found in the non-marketable interbank debt market. Money creation, that is, new bank lending and its corollary bank deposit creation, is firmly in the province on the money market. Given these, we offer an alternative definition of the money market