(Adds background, additional quotes from Muzinich, context on fund industry)
WASHINGTON, Sept 29 (Reuters) – Turmoil in money market mutual funds sparked by the coronavirus pandemic shows that decade-old reforms to the industry may not be enough to avert major outflows during a future crisis, Deputy U.S. Secretary Justin Muzinich said on Tuesday.
Muzinich said in remarks to a New York Federal Reserve conference that the Money Market Mutual Fund Liquidity Facility created in March was critical to restoring financial market functioning as broad shutdowns of the U.S. economy got underway.
But high demand for fund withdrawals was due to different metrics than those operating during the 2008 financial crisis, he said.
In 2008, the Reserve Primary Fund “broke the buck” when its net asset value fell below $1 as a banking crisis accelerated, causing a stampede of fund withdrawals that were quelled only by a U.S. Treasury backstop for