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Since the 2008 financial crisis, in which the Reserve Primary Fund "broke the buck," money market funds (MMFs) have been the subject of ongoing policy debate. Many commentators view MMFs as a key contributor to the crisis because widespread redemption demands during the days following the Lehman...
Persistent link: https://www.econbiz.de/10010428143
Elsewhere I argue that the legal concept of property was created in the image of money in the late Roman Republic. Since then, the division of property and contract has been an underlying structure of Western law. The paper argues that a main way of structuring financial corporate power,...
Persistent link: https://www.econbiz.de/10011906494
Persistent link: https://www.econbiz.de/10014520476
This paper uses a quasi-natural experiment to estimate the premium investors are willing to pay to hold money-like assets. The 2014 SEC reform of the money market fund (MMF) industry reduced the money-likeness only of prime MMFs, by increasing the information sensitivity of their shares, and...
Persistent link: https://www.econbiz.de/10014120649
In June 2022, the Federal Reserve started reducing the size of its balance sheet, which had expanded to just under $9 trillion in response to the COVID-19 pandemic. However, whereas banks' reserves at the Federal Reserve have decreased, the investment of money market funds (MMFs) at the Federal...
Persistent link: https://www.econbiz.de/10013465412
On September 16, 2008 following heavy losses on its holdings of Lehman Brothers commercial paper in the wake of the Lehman bankruptcy filing, The Reserve Primary Fund "broke the buck" when its net asset value fell below the $1.00 per share target traditionally maintained by money market mutual...
Persistent link: https://www.econbiz.de/10013000262
This paper measures credit risk in prime money market funds (MMFs) and studies how such credit risk evolved during the eurozone crisis of 2011-2012. To accomplish this, we estimate the annualized expected loss on each fund's portfolio. We also calculate by Monte Carlo the cost of insuring a fund...
Persistent link: https://www.econbiz.de/10013006432
Extensive regulatory overhaul in October 2016 changed the money market fund (MMF) industry considerably, especially for institutional clients. Nonetheless, MMFs continue to be an important cash management tool for institutions even though their asset allocations are now much more restricted to...
Persistent link: https://www.econbiz.de/10012950991
This paper presents a simulation exercise assessing the ability of Italian banks to fulfil their payment commitments in TARGET2, the Euro area Real Time Gross Settlement System, in the event of a contraction in the supply of funds in the overnight unsecured money market. The results of the...
Persistent link: https://www.econbiz.de/10013027660
This paper considers the economic implications of supporting ``prime" money market funds with capital buffers. The main findings are twofold. First, relatively small capital buffers are capable of absorbing daily fluctuations between a fund's shadow price and its amortized cost. The ability to...
Persistent link: https://www.econbiz.de/10013034284