Money markets are intangible markets which is primarily a telephone or computer market. The major instruments issued and traded in money markets are treasury bills, federal agency securities, negotiable certificates of deposit and commercial paper. The capital market encompasses financial leases and term loans, bonds and corporate equities. These are instruments in which financial institutions may invest in order to allow its value to increase which will improve the overall value on an institution’s assets. The funds of the institution’s capital structure are raised in the capital market.
The money and capital market share a common function which is to provide a company, institution or an individual with capital funds. Money markets are regulated to halt or prevent the occurrence of a liquidity problem in which current assets of the institution may be hard to convert in cash. Capital market in the other hand is regulated to safeguard investors from possible problems such as fraud.