Money-market mutual funds for the first time have nearly the same amount of assets in corporate banking cash management sweep accounts as overnight money-market sweep instruments such as repurchase agreements and commercial paper, according to a new survey by Treasury Strategies.
Money-market mutual-fund sweep products have 37%, or $100 billion, of the $270 billion in total commercial-banking sweep-account assets, while money-market sweep instruments have 38%. Offshore and other investments account for the other 25%.
Sweep accounts, widely used by corporations in cash management, automatically swap assets between a commercial deposit account and an investment account. By law, banks are prohibited from paying interest on commercial demand deposit accounts, although a proposal in Congress would repeal that regulation.