The Latest Fallacy About Money Market Funds
82 Pages Posted: 28 Jul 2012
Date Written: July 2012
A number of falsehoods have emerged during the past two years concerning money market funds and their role in the financial system. The latest fallacy claims that MMFs can cut off the supply of funds to the banking system and thereby imperil the ability of banks to provide loans to the economy. This paper examines this fallacy and explains why it is false.
Keywords: money market funds, MMFs, bank, liquidity, funding, financial markets, Basel, regulators, commercial paper, Dodd-Frank Act, Citigroup, credit availability
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