Prime money market funds invest in commercial
paper, bank deposits and other private debt in addition to U.S.
Meanwhile, U.S. money funds' holdings of fixed-rate reverse
repurchase agreements or reverse repos (RRP) offered by the
Federal Reserve fell by $8 billion last month, the analysts said
in a report released on Friday.
Fed has been testing reverse repos where it pays money funds,
Wall Street dealers and mortgage finance agencies interest to
borrow its Treasuries.
The central bank has said it would use this tool that drains
cash from the bank system in a bid to achieve its interest rate
target when it decides to tighten monetary policy.
(Reporting by Richard Leong; Editing by Chizu Nomiyama)
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