Functions and features of money markets:

Money market can be defined as a market for money and close substitutes for money. In other words market for assets that can be converted into money easily and without any loss of capital. It can also be seen as a market for short-term funds, i.e., up to one-year maturity.  The money market is generally expected to perform three broad functions.

1) It should provide an equilibrating mechanism to even out demand for and supply of short-term funds.

2) It should provide a focal point for central bank intervention for influencing liquidity and general level of interest rates in the economy.

3) It should provide reasonable access to providers and users of short-term funds to fulfill their borrowing and investment  requirements at an efficient market clearing price.

Thus Money Market is a market for short-term funds. Money market constitutes an important segment of the financial market by providing an avenue for equilibrating the surplus funds of lenders and the requirements of borrowers for short periods ranging from overnight up to an year.  In this process, it also provides a focal point for central bank's intervention in influencing the liquidity in the financial system and thereby transmitting the monetary policy impulses.