Rather than depositories, although not, MMMFs didn’t come with money, no-deposit insurance policies, and-no less than commercially-no the means to access the financial institution off last option

With the new months, this new character of your FHLBs is more cutting-edge and needs a description out-of two biggest regulatory shifts: the SEC's reform of cash market common funds (MMMFs), therefore the advent of brand new exchangeability criteria having banks.

Recall you to after the Lehman's failure inside for the 2008, dealers started initially to flee away from MMMFs. To prevent brand new manage, the new U.S. Treasury secured the $3.8 trillion inside the MMMF debts. Once we chatted about prior to now (pick right here), MMMFs functioned just like finance companies involved with the new conversion process away from liquidity, borrowing and you can (to some extent) readiness. The same as finance companies you to definitely receive dumps during the par value, it guaranteed traders a predetermined display worth of $1 (good buck) into the request. Very, in the event that Put aside Primary Funds bankrupt brand new dollars (by the neglecting to redeem during the $step one par value) inside the , MMMF investors panicked.

Into the 2014, just after nice prodding regarding the Monetary Balance Supervision Council, the brand new SEC eventually suggested a beneficial MMMF reform one to ran for the impression when you look at the mid-.