Financial Stability News

News about financial stability and central banking

Finally – US Money Market reform

WSJ reports today that the Securities and Exchange Commission will present a proposal for money market reform in the coming weeks.

The Securities and Exchange Commission will unveil a two-part plan to stabilize money funds, which invest in short-term debt instruments and are designed to be safe and readily accessible to investors, according to people familiar with the matter. At least three of five SEC commissioners would need to approve the proposals to submit them for public comment.

The proposals will be controversial, as MM funds will have to hold more capital and not be able to guarantee 100% capital surety. Many funds are already struggling in the very low interest rate environment, and some will surely fold if these proposals go through.

As Reuters reports … The proposals are vehemently opposed by the industry, which says they will effectively kill the business.

But, first we have to get the proposals. Keep looking here for the coming weeks.

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