Like bank deposits, an MMF traditionally promises to redeem its shares at par, that is, at a constant net asset value. The MMF investors may thus have an incentive to run in a case where the assets may be insufficient to back up that claim – for instance, if there are concerns that the fund may have suffered serious credit losses on some assets.
Various proposals to address that weakness are on the table: moving to variable net asset value; requiring a cushion of capital or imposing tighter requirements on the liquidity of the assets held by the MMF; establishing “gates” – i.e., restrictions on investors’ ability to withdraw their money at short notice; or a combination of these measures.