A developed money market is essential for the economic progress of a country. The significance of the developed money market can be summarized as follows:
(a) It provides finance to trade and industry when needed.
(b) It provides profitable outlet for the short-term funds of the commercial banks.
(c) It helps the govt, to raise necessary short-term funds by sale of treasury bills
(d) It helps the Central Bank in the following ways:
(e) Attracts foreign funds.
(i) Helps to formulate and implement the monetary policy
(ii) Helps to carry out its open market operations on a large scale
(iii) Provides commercial bills to the Central Bank for rediscount
(iv) Helps in the regulation of the movement of funds in the money market