The persisting effect of the pandemic on Money Market Funds and money markets

Brian Golden
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Brian Golden: Central Bank of Ireland

No 09/EL/20, Economic Letters from Central Bank of Ireland

Abstract: This letter examines the impact of a sudden surge in demand for cash in March, on money markets in general and Irish-resident Money Market Funds (MMFs) in particular. The immediate impact was felt across MMFs invested in money market debt issued by banks and companies. Liquidity declined in money markets while some investors in these funds redeemed their shares/units. In response, MMFs invested very cautiously in these securities in the following months. These effects are quite typical of what occurred in other key financial centres for MMFs and contributed to a sharp contraction in volumes in money markets.

Date: 2020-10
New Economics Papers: this item is included in nep-mon and nep-pay
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