MNI BRIEF: MMF Reform Proposals Coming July: FSB's Quarles

Regulators will propose changes to money market funds this summer after pandemic lockdowns last March highlighted how the USD6.9 trillion sector struggled under severe stress, Randal Quarles, chair of the FSB and Vice Chair of the U.S. Federal Reserve, said Tuesday. The FSB, which coordinates financial rules for the Group of 20 Economies (G20), will publish a report in July for consultation that will set out "consequential policy proposals to improve MMF resilience," he said in prepared remarks for a speech.

"The proposals should also reduce the likelihood that government interventions and taxpayer support will be needed to halt future MMF runs," he said at the Peterson Institute for International Economics.

In November, the FSB issued a report that the turmoil in markets last spring exposed vulnerabilities throughout the financial sector, but concluded that further investigation was warranted into money market and open-ended funds. US regulators in December said policymakers needed to consider major changes to make money market funds less vulnerable to investor runs, but their report stopped short of making specific recommendations.