FSB proposes menu of policies to tackle money market fund risks
Proposal aims for tailored approach to boosting resilience of key funding markets
The Financial Stability Board has proposed a menu of policy options designed to tackle risks in money market funds (MMFs), a sector that proved a major source of instability in recent crises.
MMFs may invest in public or private debt instruments, and represent an important – and growing – source of funding for banks and other firms. But the structure of the market and characteristics of individual funds can encourage runs, an issue the FSB’s ‘holistic review’ of the Covid-19 crisis identified.
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