This paper discusses reasons why money market funds do not pose a systemic risk to the United States banking system, highlighting regulatory differences from banking organizations that make MMFs more liquid, diversified, safe, and efficient than banks. This paper is based on the author's oral...

To some in the MMF industry, the Fed seems on a mission to eradicate MMFs from the financial system. Although the Fed has no direct regulatory jurisdiction over MMFs, the Fed is pushing for major regulatory changes that MMF representatives say would destroy this $2.5 trillion industry. MMFs...

The behavior of MMFs since fall 2008 suggests that in evaluating the systemic risk posed by prime MMFs it is not enough to focus on the funds' ability to meet large investor withdrawals during severe stress periods. Instead, today it appears to be even more important to look at the tendency of...

In recent years, U.S. banks have increasingly relied on deposits from financial intermediaries, especially money market funds (MMFs), which collect funds from large institutional investors and lend them to banks. In this paper, we show that intermediation through MMFs allows investors to limit...

Following comprehensive reforms to their regulatory structure in 2010, money market funds were hit in the summer of 2011 by two financial market shocks: the standoff over the U.S. federal debt ceiling and deteriorating conditions in eurozone debt markets. Anticipating that concerns about the...

The instability of money market mutual funds, a relatively new form of financial intermediary that connects short term debt issuers with funders that want daily liquidity, became manifest in the financial crisis of 2007-2009. The bankruptcy of Lehman Brothers, a major issuer of money market...

When the troubles in the subprime markets began surfacing 2007, developments unfolded rapidly in the European MMF industry. The industry suffered from asset price drops and investor redemptions. But the difficulties of the MMF industry also spread to the banking sector and contributed to general...

This paper questions why twelve Federal Reserve Bank presidents have interposed themselves in a rulemaking by the Securities and Exchange Commission concerning money market funds. The Reserve Banks have no jurisdiction over money market funds, no collective expertise in their operations, and no...

On 4 September 2013 the European Commission released a proposal that seeks to restructure the entire European money market fund (MMF) industry. This article outlines the premises of the proposal and discusses concerns related to the most controversial provisions. We believe that economically...