Study Of The Development Model Of China's Money Market Funds

The development of money market funds which originated in the United States has experienced more than three decades. Because of its relatively stable earnings, small investment risk, and high liquidity, money market funds play an important role in the fund market. In China, since the quasi-money market funds was first born in the end of 2003, money market funds industry has gone through five years, and the number of money market funds has also increased to 41.The money market has been developing quickly in China, and financial instruments are becoming rich in money market funds, which has created favorable conditions for the development of the money market funds, but there still exists many urgent problems that need to be resolved: The non-liberalized interest rates, the divided operation, the imperfect law system, the non-fully understanding to the funds, and the homogenized product all seriously hampered the further development of the fund.This article introduces the general theory of money market fund, looks at the development trend and main model for money market fund in China and overseas mature market, analyzes the differences of money market fund between China and major mature market (U.S. and France), gives a conclusion of the existing weakness of current Chinese money market, like lack of sustainable development factors, non-perfect product functions, unclear market orientation, and single product line. Referring to the success experience of the money market fund's development in mature markets, the article thinks that the direction of China's money market fund should be a well-accepted cash management tool with good safety and liquidity under current cross-sector financial operation system and perfect market interest rate environment. Therefore, this article gives some suggestions for some questions in current money market fund's development, i.e. gradually develop cross-sector business model, interest rate marketization,diversified product line, operate personal account of the pension fund in a market-oriented way, as well as improve related laws and regulations in money market.