Word: market
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Dates: during 1970-1979
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...Eurocurrency market has been one of the most important financial innovations of the postwar era. By opening a vast new source of investment capital, it has furthered international trade and development. But the $1 trillion credit reserve floating free from national or international restrictions also breeds currency instability and inflation. Moneymen figure that they must now correct the problems the Eurocurrency market has created without, in the process, destroying this useful credit system-but nobody is yet sure just how to do that...
...preserve capital in a time of double-digit inflation and depressed stock prices? Frustrated savers and unhappy investors are turning to the same solution. In record amounts, Americans are buying into the relatively new money market mutual funds. They offer minimum risk and yields of 10% to 13%, double or more the low rates set by the Government on passbook savings accounts...
...idea of investing in this money market is hardly new, but the minimum stakes are so hefty that trading used to be done only by rich people, corporations and institutions looking to park their idle cash. This discrimination has been ended by the swelling number of money funds that have been formed by mutual fund companies and brokerage firms to pool small investors' assets. Since the returns rise along with surging interest rates-and the highest bank prime lending rate rose to 15¼% last week-money market funds are booming. About 75 such funds now handle nearly...
People transfer money into funds primarily by selling off stocks and withdrawing deposits from banks and savings and loan associations. This shift away from shares could further damage capital formation; companies ideally tend to raise long-term investment money in the stock and bond markets but go to the money market for short-term borrowings to cover operating expenses. The move out of savings is badly hurting the thrift institutions. They face a tremendous competitive disadvantage and a sharp outflow of funds because the Federal Reserve's Regulation Q prohibits them from paying more than 5½% on passbook...
Fighting a rearguard action against the money funds, many bankers trumpet that their deposits are guaranteed by the Federal Deposit Insurance Corporation, and that money market funds are riskier. There is a slight risk, but since the funds are put largely into top bank and corporate securities, a number of banks and cor porations would have to go broke before the typical money market investor would suffer much loss. He would not even lose, but his yields would go down, if interest rates declined. If they dropped far enough, he might have been wiser to invest in a long-term...