Definition ∞ A government money fund is a type of money market fund that primarily invests in short-term debt securities issued by governmental entities. These funds are generally considered low-risk investments due to the backing of government credit. They offer stability and liquidity to investors.
Context ∞ In the context of digital assets, government money funds serve as a benchmark for the stability sought by certain stablecoins. Some stablecoin issuers aim to maintain their peg by holding a portion of their reserves in highly liquid, government-backed instruments. This provides a bridge between traditional finance and the crypto economy.
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