Fed Chairman Ben Bernanke heads back to Capitol Hill Wednesday, but there’s little chance he’ll enlighten markets on further monetary easing or the continuation of existing programs.
Bernanke will be joined by Treasury Secretary Timothy Geithner, and both are expected to tell the House Committee on Oversight and Government Reform that European leaders are taking the right steps to address their sovereign debt crisis, but risks remain. One of the risks to be mentioned by Bernanke is the high exposure of U.S. money market funds to Europe.
In the testimony, released Tuesday evening, Bernanke said while the funds have limited their exposure to peripheral European countries, they still have high exposure to the core countries, like Germany and France. European holdings represented about 35 percent of the assets of prime U.S. money market funds in February, and the funds remain “structurally vulnerable,” he said.
Bernanke also said the reduced financial stresses in Europe are a welcome development, and that the Fed will continue to monitor the situation, working with financial institutions and foreign officials, and will “be ready to use our tools to help stabilize U.S. markets should the situation require such action.”
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