For Stability’s Sake, Reform Money Funds
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Aug. 15 (Bloomberg) -- The crisis in the euro area is areminder that threats to financial stability are never far away.While progress has been made on financial reform over the pasttwo years, more must be done to ensure that the financial systemis robust enough to absorb shocks and still provide the creditneeded for economic growth and job creation.
A glaring vulnerability exists with money-market mutualfunds. I believe changes along the lines proposed by MarySchapiro, the chairman of the U.S. Securities and ExchangeCommission, are essential. In particular, money funds shouldhave capital buffers and modest limits on investor withdrawals.Such reforms are necessary to protect the economy from financialinstability in the future.