If treasurers aren’t already having trouble sleeping, a Moody’s Investors Service report on the effects of the financial crisis on money market funds could well lead to insomnia. Moody’s says that between 2007 and 2009, as volatility and illiquidity spread through the financial system, no fewer than 36 money market funds in the U.S. and another 26 in Europe failed to maintain a constant net asset value (CNAV). Those events, coupled with Lehman Brothers’ bankruptcy in September 2008, led to the collapse of the Reserve’s Primary Fund and redemption restrictions on 31 other money market funds.

“The Reserve Primary Fund breaking the buck was a watershed event,” says Lance Pan, director of investment research at Capital Advisors Group. Pan says treasurers are getting pickier about where to park their money, but he worries that they may end up relying on a money fund’s logo rather than performing their due diligence. “There was a misconception that the money funds were safe because no other fund had broken the buck, but that was not true,” says Pan.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?


NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2024 ALM Global, LLC. All Rights Reserved.