Money-market mutual funds would be forced to create capital buffers equaling 1 percent to 3 percent of assets to protect against losses under a plan now favored by the U.S. Securities and Exchange Commission, according to three people briefed on the regulator's deliberations.

Top SEC officials, seeking to make money funds safer, prefer the plan over another capital buffer idea crafted by Fidelity Investments and calls to eliminate the funds' stable share price, said the people, who asked not to be identified because they weren't authorized to speak publicly. The concept is based on recommendations submitted to the agency in January by university economists known as the Squam Lake Group.

“Some variant of the Squam Lake proposal would be a significant improvement that would reduce the risk that money market funds pose systemic problems in the future,” Eric Rosengren, president of the Federal Reserve Bank of Boston and a frequent critic of the risk posed by money funds, said yesterday in an e-mailed statement.