As a substitute for bank deposits, the first money market in the United States was established in 1972, which is the best example of financial innovation in the changing market environment. In the early 1970s, the United States supervised most of the deposit interest rates provided by commercial banks and savings banks, and issued a supervision Q, while the money market tool was floating interest rates. And many small and medium-sized investors can't enter the money market (because of the minimum transaction amount), and the fact that the money market uses funds to pool a lot of investors' small funds and is operated by experts. This also shows that entrepreneurs who pursue profits can find loopholes in poorly designed government regulations. However, because the market interest rate at that time was lower than the upper limit of the interest rate that deposit institutions could pay, the money market was difficult to develop because its income was not higher than the bank deposit interest rate, and the total share was very limited after a few years.

1973 There were only four funds with total assets of only 1 100 million dollars. But by the end of 1970s, due to inflation for several years, the market interest rate soared, and the yield of money market instruments such as treasury bills and commercial paper exceeded 10%, which was much higher than the interest rate ceiling of 5.5% paid by banks and savings institutions for savings deposits and time deposits. With the customers of savings institutions constantly withdrawing funds from savings deposits and time deposits to invest in the money market with higher returns, the total assets of the money market have expanded rapidly, from less than $4 billion in 1977 to $240 billion in 1982, with more than 200 funds holding assets, with total assets exceeding stocks and bonds. Therefore, the rapid development of money market and funds is the product of market interest rate exceeding the regulated interest rate of banks and other deposit institutions. At the same time, the reason why the money market can develop rapidly and maintain its vitality is that there is less supervision, there is no statutory interest rate ceiling for the money market and funds, and there is no penalty for early withdrawal.

The rapid development of money market funds has aroused strong reactions from commercial banks and savings institutions. They asked Congress to impose reserve requirements and other restrictions on money market funds. Although Congress did not approve the requirements of deposit institutions in the end, it gave commercial banks and deposit institutions a new financial tool, namely money market deposit account (MMDAS), which is similar to money market funds and also provides limited cheque issuance, no reserve requirements and high yield.

The total assets of money market funds began to decline at the end of 1982 and the beginning of 1983 under the counter-attack of deposit institutions such as banks with super NOW accounts and MMDAS. These innovative financial instruments of commercial banks and deposit institutions have temporarily prevented funds from flowing from banks to the money market. However, commercial banks and deposit institutions could not afford the cost of providing high returns, and soon, they lowered the interest rate of MMDAS. Therefore, the money market and mutual funds developed rapidly again, creating huge profits in the late 1980s and 1990s. The collapse of the American stock market from 65438 to 0987 led to a large amount of funds flowing into the money market, with total assets exceeding $300 billion. The crisis of 1989 and 1990 caused commercial banks to suddenly increase deposit insurance to protect deposits. At the same time, the regulatory authorities pay more attention to the high interest rates of deposit institutions. These changes are conducive to the rapid development of the money market and mutual funds, whose assets reached $500 billion in 199 1. From 65438 to 0996, there were about 650 taxable funds and 250 tax-free funds with total assets of about 750 billion US dollars, of which more than 80% were taxable assets. Its shares account for about 4% of all financial intermediary assets and more than 25% of the total assets of all mutual funds (stock funds, bond funds and money market mutual funds). 1997 reached 1 trillion dollars.