US Money Market Funds and the European Sovereign Debt Crisis

February 14, 2012
Although it has been recently reported by the financial press that the U.S. Securities and Exchange Commission will likely propose new regulations for money funds, the ability of U.S. money market funds (money funds) to operate successfully through the European sovereign debt crisis calls into question the need for additional regulatory measures. This update examines how the rules governing money funds, as amended in 2010, operated to protect funds throughout the crisis and reviews the actions that fund boards and management have taken to further strengthen the funds. It also offers suggestions as to areas boards and management may wish to focus on if conditions continue to deteriorate in Europe.