by Seems to be some confusion out there so here you can see in this Government Money Market Mutual fund prospectus that the Fed has created a new govt obligation for USD savers to save in… They have b (fund’s largest holding) in a RRP with the FRBNY at the 3.05% RRP rate: This is going to go up towards 4% in two weeks then towards 5% in December… ??♂️??♂️This RRP asset has been created as an alternative to a depository account at a system Depository Institution for USD savers because those institutions don’t have a high enough value of regulatory assets to allow these USD balances to be on deposit there… due to the regulatory asset value reduction effects of the Fed’s own policy rate increases themselves…Rube Goldberg arrangements but it’s still understandable…
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Seems to be some confusion out there so here you can see in this Government Money Market Mutual fund prospectus that the Fed has created a new govt obligation for USD savers to save in…
They have $20b (fund’s largest holding) in a RRP with the FRBNY at the 3.05% RRP rate:
This is going to go up towards 4% in two weeks then towards 5% in December… ??♂️??♂️
This RRP asset has been created as an alternative to a depository account at a system Depository Institution for USD savers because those institutions don’t have a high enough value of regulatory assets to allow these USD balances to be on deposit there… due to the regulatory asset value reduction effects of the Fed’s own policy rate increases themselves…
Rube Goldberg arrangements but it’s still understandable…