The drumbeat is growing louder for more investors to consider short-duration bond ETFs with money market mutual funds facing the loss of some of their key competitive advantages.

All 12 Federal Reserve Bank regional presidents in a letter to the Financial Stability Oversight Council said they support money market mutual fund reform. The move provides cover for the SEC to pursue an overhaul of the huge money fund business.

“Money market mutual funds have no explicit capacity to absorb losses in the event of a decrease in the value of assets held within the fund’s portfolio,” said the Reserve Bank presidents in their joint letter.  “This structure gives rise to a risk of destabilizing money market mutual fund runs by creating a first mover advantage.”

Eric Rosengren, chief of the Federal Reserve Bank of Boston, submitted the letter on behalf of all 12 central bank presidents, the Boston Globe reports.

“Rosengren has been pressing for stronger rules for money market funds in the wake of the 2008 financial crisis and was supportive of efforts by former SEC chief Mary Schapiro to impose new rules. Schapiro’s effort failed, but the Financial Stability Oversight Council has proposed similar changes to enhance the safety of money markets,” according to the report.

“The status quo is not acceptable,’’ Rosengren told the Boston Globe. “Some kind of reform is needed” to reduce the potential risk in the system.

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