Money market funds – an economic perspective: Matching short-term investment and funding needs

Author (Corporate)
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Series Details 26.02.15
Publication Date 26/02/2015
ISSN 1612-0272
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Money market funds are important financial players in Europe and the US, offering investors capital preservation and daily liquidity on the one hand, while providing short-term funding in money markets on the other. However, the European and US markets differ in their structures and economic functions: In Europe, where the market is split into two distinct segments, MMFs’ balance sheets reflect to a large degree intermediation within the financial sector and a strong investment focus on bank debt. In the US, by contrast, a homogeneous set of industry standards exists and MMFs’ business is geared more towards direct intermediation between non-financial sectors.

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