What problems will the MMIFF address?
Short-term credit markets have been under considerable strain in recent weeks. Investors, including money market mutual funds, have had difficulty selling assets into the secondary market. As a result, investors have favored extremely short-term commercial paper (CP) or certificates of deposit (CDs) maturing in seven days or less. The tight markets in longer-dated commercial paper have in turn made it difficult for financial institutions and businesses to raise funds to finance inventory, payroll, and other needs. A special ICI survey of money market funds in early October found that about half of assets in taxable, non-government money funds (known as prime funds) were invested in highly liquid securities–Treasury and agency securities, plus CP, CDs, and repurchase agreements maturing in seven days or less. This concentration on highly liquid assets limits money market funds’ ability to help finance American businesses’ operating needs.
