Dearth of Dollars Exposes Flaws in Rebooted Money-Fund Rules

Groundbreaking reforms to safeguard a major source of short-term borrowing are again under scrutiny after the pandemic-related dollar liquidity crunch that prompted Federal Reserve intervention.

U.S. money-market funds -- which provide a lot of the cash that companies and governments borrow on a short-term basis -- underwent a major regulatory overhaul in 2016 to prevent a repeat of a damaging run on these funds that took place during the 2008 meltdown. But a coronavirus-related exodus of cash earlier this year from so-called prime funds -- those that are able to buy short-term company paper -- showed that this risk remains. ...