Central Bank Access and Flight to Safety

Lucia Gurrieri, Chase P. Ross, Ben Schmiedt, Alexandros Vardoulakis and Vladimir Yankov
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Chase P. Ross: https://www.federalreserve.gov/econres/chase-p-ross.htm
Alexandros Vardoulakis: https://www.federalreserve.gov/econres/alexandros-vardoulakis.htm

No 2025-100, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We examine whether access to the Federal Reserve's Overnight Reverse Repo Facility (ON RRP) affects money market fund flows during flight-to-safety episodes. We find that funds with ON RRP access serving sophisticated investors experience about a 1 percentage point increase in net daily flows over total assets during the March 2020 flight-to-safety episode relative to similar funds without access. The effect aligns with theoretical predictions and explains more than half of the inflows in those funds. Our results show that access to central bank deposit facilities amplifies flight-to-safety behavior.

Keywords: Central bank account access; Flight-to-safety; Regulation D (search for similar items in EconPapers)
JEL-codes: E58 G01 G21 G23 (search for similar items in EconPapers)
Pages: 9 p.
Date: 2025-11-14
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2025-100

DOI: 10.17016/FEDS.2025.100

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