The U.S. Treasury Department proposes to temporarily guarantee money market mutual funds with taxpayer dollars under its economic stimulus plan, Bloomberg News reports, citing a Treasury document it obtained.
The department seeks to temporarily permit use of its exchange stabilization fund to guarantee money markets, according to the document.
It proposed ending the authority when President Trump ends the national emergency declaration that he announced on Friday.
A Treasury guarantee may not be necessary now, “but who knows tomorrow,” said Peter Crane, president of money fund tracking firm Crane Data. “A blanket guarantee is sometimes the only thing that can stop these runs.”
Crane told Bloomberg News that outflows from institutional funds this week were putting those vehicles under stress as investors shifted their holdings to cash and government debt.