Bank relents on access to money market funds
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Your support makes all the difference.THE GERMAN government is shortly expected to give legislative approval for the creation of money market funds, following the withdrawal of Bundesbank opposition, writes John Eisenhammer.
This will give savers access to much higher short-term interest rates than are available under the present system, in which deposit rates are strictly controlled.
To obtain rates comparable to those available to banks in the money markets, Germans have had to deposit their savings outside the country. For the first time, domestic investors will benefit from the full range of investment funds.
The Bundestag, the lower house of parliament, plans to incorporate approval of money market funds into its second financial markets law, scheduled to pass this summer.
Rolf Breuer, board member of Deutsche Bank and chairman of Deutsche Borse, the holding company that runs the Frankfurt stock exchange and groups together regional bourses, welcomed the impending change as the final step of deregulation that would thrust Germany's financial centre into the international front-line.
Until now, the Bundesbank had steadfastly opposed the creation of money market funds, fearing that they would undermine the effectiveness of its minimum reserve instrument. While term deposits are subject to minimum reserve requirements, money market funds would not be.
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