Money Market Funds guaranteed up to $50 billion

The US Treasury department said on Friday morning that it would guarantee, for the time being, up to $50 billion of money market funds in order to ensure their solvency.

In a statement by the US government it said “For the next year, the U.S. Treasury will insure the holdings of any publicly offered eligible money market mutual fund — both retail and institutional — that pays a fee to participate in the program,” it carried on to say “Money market funds play an important role as a savings and investment vehicle for many Americans”.

This week’s global market turmoil was a result of money markets funds falling; the concerns of them falling below $1 has aggravated the global financial market problems and have caused the collapse of Lehman Brothers, and several other severe strains on Wall Street and the rest of the world.

Source: nytimes