The U.S. Treasury Department today said it will back money-market funds for both retail and institutional investors for one year but will charge a fee to those participating in the program.
The measure comes after two money-market funds fell below $1, or par value, due to exposure to risky short-term investments.
A statement said the department will make available as necessary the assets of the Exchange Stabilization Fund for up to $50 billion. The ESF, established in 1934, authorizes the Treasury secretary to deal in gold, foreign exchange and other instruments of credit and securities to promote international financial stability.
Maintaining confidence in the money-market fund industry is critical to protecting the integrity and stability of the global financial system, the statement also said, noting that money-market funds falling below $1 have exacerbated global financial market turmoil.