Withdrawals from Funds emerged as new worry for the financial market

On Thursday U.S. stock market boosted as investors see the hope that government might take some significant steps to solve out financial market problems but there is another problem wrapping the financial market.

In an effort to ease out worried financial market the Federal Reserve, ECB and other major central banks pumped hundreds of billions in the commercial banks through out the glob in the way of added loans. But these steps contribute a little to lessen the growing problems.

Worried investors are pulling back their money from the money market funds which are one of the most important finance sources for the banks and companies. As well as the commercial banks stored the cash in the course of ambiguity regarding what will be the effect of this week’s financial havoc on them and their trading partners.

According to Crane Data LLC on Wednesday a hefty $78.7 billion was withdrawn from the largest money market fund. Money market fund drive cash in the credit market by buying commercial papers from the banks. Commercial papers are short term IOUs issued by banks and companies.

Because of the market-wide liquidity issues, Putnam Prime Money Market Fund would distribute its assets to customers and closed on Wednesday, it stated.

The withdraw from the money market funds which are considered safe lace for money, started with the statement that Reserve Primary Fund’s net asset value has plunged below $1 per share earlier this week.