Top regulators pledged Friday to push reforms in a key corner of U.S. financial markets that the Federal Reserve and Treasury had to rush to support after it was roiled during the coronavirus outbreak in the spring of 2020.
Members of the Financial Stability Oversight Council discussed the reforms aimed at the so-called short-term funding markets, which include money market mutual funds holding trillions of dollars.
The oversight council is an interagency group headed by Treasury Secretary Janet Yellen, who said the 2020 crisis prompted “extreme policy interventions” by the Federal Reserve and Treasury to restore order in the market.
Federal Reserve Chair Jerome Powell, also a member of the council, said the 2020 crisis was triggered by a “dash for cash” that prompted the Fed to step in with back-up financing to calm the turmoil.
“Rapid redemptions at money market funds resulted from and in turn exacerbated the liquidity pressures,” he told the panel.