Let's take a brief look at the instruments through which participants can borrow in the money markets. We'll focus first on unsecured borrowing, which means borrowing based solely on the issuer's credit worthiness, and promise to pay. There's no collateral or assets involved.

We can categorize these unsecured instruments in a few different ways.

Firstly, by issuer, deposits are bank issued instruments. T-bills are issued by governments and commercial paper or CP is issued by corporations. Secondly, by coupon type, deposits are coupon investments, meaning you invest the par amount, receive the par amount back, and you earn interest in the form of a coupon.

T-bills and commercial paper, however, are discount instruments. They are issued at a discount to their face value and repaid at par or face value. While the difference between receiving a coupon or earning a return through the discount method doesn't make a significant impact from a return perspective, it's important to account for this distinction when comparing different investment options just like with day count conventions. Thirdly, by tradability, deposits are non-negotiable, which means they generally cannot be sold to other market participants before maturity. Whereas T-bills, commercial paper and certificates of deposit, these are negotiable instruments. However, just because they are tradable doesn't mean there's always a liquid secondary market.

For instance, certificates of deposit and commercial paper are typically buy and hold instruments, and there's relatively little activity in the secondary market. Still, investors do have the option to sell them before maturity if necessary.