Regulated money market funds (MMFs) in the U.S. have become an intense area of focus for policymakers – yet again. After these funds performed poorly in the global financial crisis of 2008, policymakers spent several years deliberating and implementing extensive changes in 2010 and again in 2016. These changes were intended to make both government and prime (credit) MMFs less vulnerable to market volatility and better positioned to meet investor liquidity demands, especially during periods of broad-based market illiquidity.

While these regulatory changes were well-intentioned– and some achieved their policy goals – prime MMFs, in particular, ran into issues again during the unprecedented market turbulence of March 2020. Several fund sponsors and the Federal Reserve had to step in to shore up the funds, causing many policymakers to call for additional reforms.

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The Author

Jerome M. Schneider

Head of Short-Term Portfolio Management

Libby Cantrill

Executive Office, Public Policy

Kenneth Chambers

Fixed Income Strategist

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CMR2021-0412-1600179

Reassessing Short-Term Strategies Amid Market Recalibration: Liquidity, Libor and the Fed
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