The US Treasury Department on Friday morning announced that it will set up a temporary insurance program for the US money market mutual fund industry.Under the proposed plan the Treasury will insure the holdings of any publicly offered eligible money market mutual fund â?? both retail and institutional â?? that pays a fee to participate in the program until the end of 2009.
President Bush approved the use of existing authorities by Treasury Secretary Henry Paulson to make available as necessary the assets of the Exchange Stabilisation Fund for up to $50bn.
The Treasury said the action should enhance market confidence and alleviate investorsâ?? concerns about the ability of money market mutual funds to absorb a loss. Investors in money market mutual funds with a net asset value that falls below $1 will be notified that their fund triggered the insurance program.
