We introduce a new channel through which US money market funds (MMFs) affect the pricing of near-money assets and measured convenience yields. Our theoretical model reveals that MMFs' strategic interactions create frictions that are exacerbated by T-bill market illiquidity. Using instrumental...

The 1960s and 1970s witnessed rapid growth in the markets for new money market instruments, such as negotiable certificates of deposit (CDs) and Eurodollar deposits, as banks and investors sought ways around various regulations affecting funding markets. In this paper, we investigate the impacts...

We analyze the impact of introducing a central bank-issued digital currency (CBDC) on the operational framework of monetary policy and the macroeconomy as a whole. To this end, we develop a New Keynesian model with heterogeneous banks, a frictional interbank market, a central bank with deposit...