Why? Changing the Rules for Money Market Funds will Harm American Businesses
Money market funds work for American business. Efficient and flexible, they provide affordable capital in the short term for businesses across the country. Whether an investment tool or a financing product, money market funds help businesses better manage their cash flows. Strong and resilient, they help businesses thrive.
So why are regulators so keen to fundamentally alter a product the business community relies on? Before they propose arbitrary changes to this critical economic engine, the U.S. Chamber of Commerce calls on regulators to answer a few simple questions.
3 Questions for Financial Regulators:
• Why are more rule changes needed? Substantial changes were made to financial regulations in 2010. Are these changes working? And how have funds performed in the wake of the U.S. debt ceiling negotiations and downgrade, and the European sovereign debt crisis? If the 2010 reforms haven’t been studied, how will regulators know if vulnerabilities remain?
• Why now? Fundamental changes in money market funds now—in a time of economic recovery—could itself cause turmoil. Why are financial regulators willing to risk this?
• Why these proposals? Proposed “solutions” such as floating net asset value (NAV) and capital requirement plus redemption restrictions, would fundamentally change the quality and characteristics of money market funds, causing corporate investors to walk away. If regulators can prove that additional changes are needed, they should find solutions that preserve the versatility and usefulness of the product for businesses to avoid needlessly hampering our economic recovery.
Money market funds work for American business.
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