Like the London money market, the New York money market is another international financial centre. The New York money market is mostly concentrated in the Wall Street area where national and foreign surplus funds seek short-run investment and outlet through lending to the needy borrowers.
It is America’s biggest financial centre where the country’s short-term binds flow and find temporary employment with a small return and without much risk of loss.
It is through the New York financial network that the open market operations at the Federal Reserve System are conducted. In short, like other money markets, the New York money market also brings together the lenders and borrowers of short-term funds.
New York as international Centre of Finance a number of factors are responsible for the growth of America as an international financial centre, particularly after 1914:
(i) The establishment of the Federal Reserve Bank in 1913 as the central bank of America strengthened the monetary system and monetary institutions in the country.
(ii) Rapid growth of financial institutions was able to deal with the domestic transactions which were previously operated through London.
(iii) The World War 1 and its after-effects reduced the importance of other European money markets.
(iv)Import of gold by America provided a solid backing to the dollar and raised its strength and importance as an international currency.
(v) America converted itself from a debtor country to a creditor and emerged as the topmost industrial country in the world. This increased its reputation in the international financial markets.
(vi) There was an accumulation of large capital resources in America. These resources strengthened its financial position in the world.
(vii) Considerable increase in inter-governmental transactions due to foreign aid programmes of international financial institutions, like International Monetary Fund and the World Bank, and the increased outflow of American capital led to the emergence of dollar as the most important currency of the world and of New York as a major international centre of finance in the postwar period.