Money markets had their biggest outflows since the collapse of Lehman Brothers as panicked investors worried about a U.S. debt downgrade and sliding stock market.
Debt impasse in Washington has some concerned about cash moving out money market funds and in turn, creating stress in short term liquidity markets.
You might be surprised by some of the possible answers. Click ahead to see what happens if the U.S. credit rating is downgraded.
As an alternative to savings accounts at a commercial bank, many people choose to put their money into money market accounts set up by way of money market funds. What are they and how are they constituted?
The goal of money market funds is to never lose money and maintain a net asset value (NAV), or per-share value, at $1, and when their NAV goes below $1, this is called breaking the buck. CNBC explains.
Money market funds are required by law and by their own charters to hold only high-quality securities. So if the ratings agencies downgrade the credit of the United States, will they have to sell their Treasury holdings?
Money market funds have long been a popular haven for conservative investors, but they could become one way that the tremors of the financial crisis in Greece touch the pocketbooks of Americans — about 50 million of them the New York Times reports.
CNBC's Kate Kelly looks at the impact the Greek crisis could have on your money market fund. Peter Crane, president of Crane Data, weighs in, as well.
As we explained last week, U.S. money market funds aren't directly exposed to Greek government debt. But they hold around $1 trillion of debt issued by European banks—who are among the biggest creditors of Greece.
Money market funds have no explicit guarantee from the US government.
CBC's Kate Kelly has the details on Euro stress impacting money market funds.