Regulatory Outlook | 10.20.20
Fed Signals Prime Money Market Funds Need Stiffer Rules
The Federal Reserve is signaling that the coronavirus disruptions that hit financial markets in March indicate prime money market funds (MMFs) and other sources of short-term funding may need tougher rules. “The runs on prime money funds and commercial paper were particularly disappointing,” Fed Vice Chairman of Supervision Randal Quarles said in prepared remarks for a Thursday speech. He added that “it is worth asking whether there may be other steps needed to secure these very important sources of liquidity.” Quarles also said that this year's tumult raises questions about whether regulations imposed on MMFs after the 2008 financial crisis “fell short” and that the Financial Stability Board will be examining this issue.
Read the full article on Bloomberg.