A recent ICI Viewpoint, entitled "Money Market Funds and the Expiration of Unlimited Deposit Insurance" and written by Sean Collins and Chris Plantier, comments on the recent expiration of unlimited FDIC insurance. It explains, "As stipulated in the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Federal Deposit Insurance Corporation's unlimited insurance coverage on non-interest bearing transaction accounts, also known as the Transaction Account Guarantee (TAG), expired on December 31, 2012. Prior to the program's expiration, analysts predicted a massive shift ("hundreds of billions of dollars") from non-interest bearing transaction accounts to money market mutual funds. So what do the numbers tell us thus far in 2013? Bank deposits remain significantly higher than a year ago -- more than $700 billion higher -- while money market fund assets are just $17 billion above their January 2012 level. Money market funds have not received a surge in cash in January related to the TAG expiration. In fact, money market fund assets declined by $9 billion in the first full three weeks of January.... In the last two months of 2012, both banks and money market funds experienced inflows. On a seasonally adjusted basis, deposits at domestically chartered commercial banks rose by $222 billion in the last two months of 2012. Similarly, assets in all money market funds increased by a non-seasonally adjusted $158 billion in the nine weeks to January 2, 2013. (ICI does not publish seasonally adjusted levels.)" In other news, see also Bloomberg's "Treasury Receives Mixed Advice on Floating Rate Note Index".
