International securities regulators have finalized a new framework for money-market funds (MMFs) to address concerns that these funding instruments pose “shadow banking” risk that could rise to systemic proportions. These policy recommendations build on a proposal issued earlier this year, which was accompanied by an unprecedented note announcing that the report did not reflect the position of a majority of SEC commissioners. The final framework includes an identical disclaimer, throwing in doubt the degree to which the U.S. would concur in these recommendations. However, the chair of the SEC has now appealed to the Financial Stability Oversight Council (FSOC) for action to spur systemic MMF rules, leading to renewed negotiations and, perhaps, action along lines recommended by IOSCO.
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