Money markets primer
About this course
The plumbing beneath every rate. Repo vs unsecured, the BoE operating framework, where SONIA fits in the global picture, and what it all means for an LA treasurer.
What you'll learn
- What are money markets?
- Secured vs unsecured
- The BoE corridor
- SONIA in context
- What it means for you
Part of these pathways
Related courses
- Interest rates: foundations
- Recent global economic events
- Inflation: RPI, CPI & index-linked gilts
- Day-count conventions
- Yield curves explained
- MPC, QE & gilt supply
Common questions
What is Bank Rate?
The Bank of England's policy rate, set by the Monetary Policy Committee. The rate at which the BoE remunerates commercial bank reserves and the anchor for sterling money market rates.
What is BoE Operating Framework?
The Bank of England's system for keeping market rates close to Bank Rate — through the Reserves Account, the Standing Lending and Standing Deposit facilities, and open market operations.
What is Certificate of Deposit (CD)?
A negotiable receipt for a deposit at a bank, with a fixed rate and maturity. Tradable in the secondary market — unlike a plain term deposit.
What is Commercial Paper?
Short-term unsecured promissory notes issued by large corporations or financial institutions. Maturities up to 270 days. Higher yield than T-bills but more credit risk.
What is Haircut?
The discount applied to collateral in a secured loan. A 2% haircut on £100m of gilts means the lender gives £98m. Protects the lender against price falls in the collateral.
What is ICMA?
International Capital Market Association. Sets standard documentation for European money market and bond transactions.