Money-market mutual funds are widely used, poorly understood – and suddenly much in the news.
After decades of quietly providing millions of investors with relatively safe places to put their cash, money-market funds are getting a lot of attention in Washington. After one prominent money-market fund – the Reserve Primary Fund – lost money in the 2008 credit crisis, federal regulators have studied the risks these funds pose to their shareholders as well as the whole financial system. They have also looked at how the funds might be affected by the debt crisis in the euro zone, because some money-market funds have exposure to European banks.