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U.S. Treasury Department Ask For Reforms On Money Market Funds

The United States (U.S.) Treasury Department has called on policymakers to institute changes aimed at the purpose of overhauling of US money market funds in the country. 

According to a report made by Pete Schroeder and Kate Duguid of Reuters, the US treasury calls for the fresh changes that are intended specifically to avoid investor runs and to strengthen money market funds to weather such events. 

The proposal came in lieu of the big outflows that have hit the said market during the early onset of the Coronavirus disease-2019 (COVID-19) pandemic during the first part of 2020.

During this time, the government was forced to intervene and cast a heavy hand in order to stabilize the whole scenario by pouring in support through the form of providing US treasury funds in the overall supply of market money. 

Proposed policy changes include propping up the imposition of stricter rules involving fund redemption, or higher capital buffers for such funds.

Nevertheless, the recommendations have fallen short of providing specific, workable steps authorities can take to avoid such circumstances.

Market money reforms have been the talk of several industry insiders for years now yet have not been acted upon amidst the several financial crises the U.S. has faced over the years. 

Many experts and members of the different working group on financial markets in the country have voiced their support for the report and its initial slew of recommendations.

Bank of America’s Mark Cabana expressed their belief that the proposals laid down in the report ‘would help relieve future stress’, as cited in the same Reuters report.

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