In a speech in October 2012, Federal Reserve Governor Daniel Tarullo made the following observation: Money market
Question:
In a speech in October 2012, Federal Reserve Governor Daniel Tarullo made the following observation:
“Money market funds remain a major part of the shadow banking system and a key potential systemic risk even in the post-crisis financial environment.” Tarullo went on to say that he did not believe that existing regulations “are sufficient to mitigate the run potential in money market funds.”
a. What is “systemic risk”?
b. What is the “run potential” in money market mutual funds? How is this run potential related to systemic risk in the financial system?
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a Systemic risk refers to the risk of widespread financial instability or the collapse of an entire financial system typically caused by the interconn...View the full answer
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Related Book For
Money Banking And The Financial System International Edition
ISBN: 978-1292000183
2nd Edition
Authors: R. Glenn Hubbard ,Anthony P Obrien
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