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Why was there a run on money market funds at the beginning of the current crisis?

Why was there a run on money market funds at the beginning of the current crisis?

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Answer #1

Money market is the component of market which provided short term funds. The money market deals in short term loans, generally for a period of one or less year.

Government provides treasury bills which had a maturity of few days to one year. Dealers buy them in large numbers directly from government to trade between themselves or to sell to individual investors.

Money market is basically the flow of money between government, banks, corporations and financial institutions. So there is always a run on money market.

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