March 19, 2020 / 12:47 PM / in 10 days

Bank regulators set rule exempting new Fed money market tool from capital requirement

WASHINGTON (Reuters) - U.S. bank regulators on Thursday set a rule allowing firms to use the Fed’s new Money Market Liquidity Facility without counting it against their capital requirements.

The waiver is meant to encourage banks to use the facility as needed to keep the $3.8 trillion money market mutual fund industry functioning, and reflects “the fact that institutions would be taking no credit or market risk in association with such activities,” the regulators said in a statement.

Reporting by Howard Schneider; Editing by Chizu Nomiyama

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