86 See 2012 AFP Liquidity Survey Report of Survey Results July

86 see 2012 afp liquidity survey report of survey

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86See2012 AFP Liquidity Survey: Report of Survey Results, July 2012.
46 2012 down from 30 percent just a year earlier, and down from almost 40 percent in 2008.87This shift has likely been motivated by the availability of unlimited FDIC insurance on non-interest bearing accounts since the end of 2010, and may be likely to reverse if it is eliminated in January 2013.88Figure 18 2.Effect on Current Issuers The effect of a significant shift in investment away from money market funds and into alternative investment vehicles would depend on where investors channel their monies. If, for example, investors choose to manage cash on their personal accounts rather than invest in alternate cash management products, they will most likely invest in securities similar to those 87See 2008 AFP Liquidity Survey: Report of Survey Results 88As of December 31, 2011, the amount in domestic noninterest-bearing transaction accounts over the normal $250,000 limit was $1.4 trillion. See Federal Deposit Insurance Corporation Quarterly Banking Profile, Fourth Quarter 2011, at 16, available at . At December 31, 2008, the amount in domestic noninterest-bearing transaction accounts over the normal $250,000 limit was $814 billion. See Federal Deposit Insurance Corporation Quarterly Banking Profile, Fourth Quarter 2008, at 20, available at . If substantial assets were to flow out of money market funds, what impact would that have on the commercial paper market and the market for municipal debt? What would be the impact on corporate borrowers, municipalities, and states that sell their debt to money market funds?
47 held by money market funds. In this case, the effects on capital formation from such a shift are likely to be minimal. The preference for this alternative, however, may be tempered by the cost to investors of managing cash on their own. Alternatively, investors may shift their monies to alternative investment vehicles. This shift could have an economic effect on the market for short-term securities. Table 7 below shows the aggregate assets under management for different types of money market funds using data on money market holdings, by type of fund, from Form N-MFP as of June 30, 2012. Prime money market funds hold 57 percent of the total assets of all registered money market funds, whereas Treasury money market funds hold 15 percent of these assets. Both types of funds have very different exposures to certain asset classes. For instance, at March 31, 2012, prime money market funds held approximately 43 percent of financial-company commercial paper outstanding and 9.5 percent of Treasury bills outstanding, whereas Treasury funds held approximately 18 percent of Treasury bills outstanding and only 0.23 percent of financial company commercial paper outstanding (see Panel C below).

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