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OFR Monitor Shows U.S. Money Market Funds Remain a Popular Parking Option for Investor Cash

Authors: Dagmar Chiella

A new blog provides an overview of changes to MMF during the review period. Using SEC N-MFP data, the author finds that MMFs continued to increase their investment in repurchase agreements (repos) with banks and dealers, as their participation in the Federal Reserve’s Overnight Reverse Repo Facility (ON RRP) overall decreased during the observation period. The transactions are generally backed by collateral with a value that exceeds the cash MMFs lend, which should be protected the fund if a repo counterparty defaults, provided the collateral value is marked-to-market daily and adjusted accordingly.