BUSINESS INFORMATION - U.S. authorities on Friday, ending the guarantee program for money market funds that began last year to stop the escape of deposits that could destabilize the financial sector during the market turmoil.
Finance Ministry says it has no losses under this program and has received 1.2 billion dollars in fees.
This program was established in September after the collapse of investment giant Lehman Brothers and the government rescue of insurance giant AIG. Launched during the three months initially and extended for a full year.
Finance department has approved the use of up to 50 billion dollars to guarantee deposits that are widely held by Americans in mutual funds and brokerage, if the company pays the insurance fee.
Financial companies the U.S. holds about 3.5 trillion dollars on money market funds, which are generally considered safe investments although they are usually not guaranteed federal.
Money market fund is a type of mutual fund required by law to invest in low-risk securities, so they have a relatively low risk compared with other mutual funds. They pay dividends that generally reflect short-term interest rates, according to AFP.
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