Money market fund

A money market fund (also called a money market mutual fund) is an open-end mutual fund that invests in short-term debt securities such as US Treasury bills and commercial paper.^[1] Money market funds are managed with the goal of maintaining a highly stable asset value through liquid investments, while paying income to investors in the form of dividends. Although they are not insured against loss, actual losses have been quite rare in practice.

Regulated in the United States under the Investment Company Act of 1940, and in Europe under Regulation 2017/1131,^[2] money market funds are important providers of liquidity to financial intermediaries.^[3]

^ "U.S. Securities and Exchange Commission on Money Funds". Sec.gov. 2013-01-16. Retrieved 2014-07-28.
^ "Money market funds - Consilium". www.consilium.europa.eu. Retrieved 2019-06-27.
^ See Markus K. Brunnermeir,Deciphering the 2007-08 Liquidity and Credit Crunch, Journal of Economic Perspectives (May, 2008)(arguing that investment banks reliance on commercial paper and repo markets had increased over the last 3 years. This reliance is seen in the fact that 25% of assets purchased by investment banks had been funded through the repo market.)

[1] "U.S. Securities and Exchange Commission on Money Funds". Sec.gov. 2013-01-16. Retrieved 2014-07-28.

[2] "Money market funds - Consilium". www.consilium.europa.eu. Retrieved 2019-06-27.

[3] See Markus K. Brunnermeir,Deciphering the 2007-08 Liquidity and Credit Crunch, Journal of Economic Perspectives (May, 2008)(arguing that investment banks reliance on commercial paper and repo markets had increased over the last 3 years. This reliance is seen in the fact that 25% of assets purchased by investment banks had been funded through the repo market.)

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