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The U.S. Securities and Exchange Commission has circulated draft rules that would reform the $2.6 trillion money market fund industry, a proposal Rosengren supports. But it is unclear whether enough SEC commissioners will back the plan.
'In the absence of such reforms for all money market mutual funds, an alternative for funds with depository institution or depository institution affiliated sponsors would be to include likely money market mutual fund support in the sponsor's stress tests,' said Rosengren, who has pushed industry reforms since last summer. 'Based on the historical experience of their money market funds, the historical experience of similar funds, and their money market funds' exposures, sponsors could calculate the likely capital support needed from the organization in a stress scenario,' he said in a statement prepared for an event sponsored by the Dutch Central Bank.Rosengren did not comment on Fed monetary policy nor the economy, instead focusing on protecting the financial system from a repetition of the 2007-2009 crisis.... Continue to read.
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