Fitch notes that RRP volumes have fallen off markedly since mid-May as repo rates rose, which provides more attractive investment alternatives for money funds. Despite volume declines, the gains seen during Fitch's study period provide evidence that the FRBNY has been able to influence market rates using the new RRP facility.
Total FRBNY RRP investments by government MMFs (repos) rose by
Fitch believes this trend likely reflects growing comfort with the operations of the RRP program and more attractive rates. Decreasing reliance on repo funding among dealers also reflected the effects of Basel III regulatory considerations, as banks have been forced to re-assess the economics of short-term wholesale funding.
Fitch's analysis is based on data from the universe of government MMFs with assets totaling
The full report 'Reverse Repo Program Gains Influence' is available at 'www.fitchratings.com' or by clicking on the link.
Additional information is available at 'www.fitchratings.com'.
Director (Fund and Asset Manager Team)
Source: Fitch Ratings
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