You can’t always get what you want (where you want it): Cross-border effects of the US money market fund reform

Daniel Fricke, Stefan Greppmair and Karol Paludkiewicz

Journal of International Economics, 2024, vol. 147, issue C

Abstract: This paper documents significant cross-border effects of the 2014 US money market fund (MMF) reform on euro area MMFs. As US-based prime funds became less money-like due to the reform, euro area-based prime funds received large inflows from foreign investors. These cross-border flows were mainly motivated by the search for stable NAV instruments. Consistent with an easing of competitive pressure, euro area prime MMFs reduced their risk-taking. Lastly, the 2017 EU MMF regulation, a weaker regulatory intervention compared to the US reform, did not lead to a reversal of the documented cross-border flows.

Keywords: Cross-border effects; Regulation; Money market funds; Risk-taking (search for similar items in EconPapers)
JEL-codes: E41 G23 G28 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:147:y:2024:i:c:s0022199623001320

DOI: 10.1016/j.jinteco.2023.103846

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