...Fed's RRP Takes the Lead: U.S. taxable money market funds (MMFs) continued to shift investments away from European banks throughout 2014, as risk aversion continued and demand for dollar funding by European banks declined. At Dec. 31, investments in the Federal Reserve Bank of New York's (FRBNY) overnight and term reverse repurchase agreement (RRP) facilities topped allocations to European banks for the first time (see graph below). European Allocations Resume Fall: Dollar funding of European banks by U.S. MMFs fell in 2014, particularly in the latter half of the year. Investments in European bank CDs, time deposits (TDs) and repo securities declined by 11.3% year over year as of Dec. 31, 2014, to $319.2 billion (according to Crane Data LLC). Allocations to U.S. banks decreased by 6.4% during the year to $181.0 billion. Eurozone Bank Funding Down: Within the eurozone, the annual reduction in investments by MMFs was slightly more significant, with exposure to CDs, TDs, and repo declining...
