The borrowing and lending in money markets is high volume, low risk and short-term. Because it is short-term, transaction costs are high relative to the interest that can be earned. And because transaction costs are high relative to the interest that can be earned, transactions in the money market tend to be for very large amounts.
Short-term is generally understood as less than one year, although, in fact, most money market activity is concentrated in terms to maturity between overnight and one-week.
Money market borrowing and lending utilises a variety of different instruments. These include:
and number of securitised debt instruments:
Borrowers in money markets are all high quality names and so the securities issued and traded have low risk, low yield, high liquidity characteristics which are attractive to risk averse lenders.