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

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  • Golden, Brian

    (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.

Suggested Citation

  • Golden, Brian, 2020. "The persisting effect of the pandemic on Money Market Funds and money markets," Economic Letters 09/EL/20, Central Bank of Ireland.
    • Handle: RePEc:cbi:ecolet:09/el/20
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    File URL: https://www.centralbank.ie/docs/default-source/publications/economic-letters/vol-2020-no-9-the-persisting-effect-of-the-pandemic-on-money-market-funds-and-money-markets-(golden).pdf?sfvrsn=27
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    Cited by:

    1. Dunne, Peter G. & Giuliana, Raffaele, 2021. "Do liquidity limits amplify money market fund redemptions during the COVID crisis?," ESRB Working Paper Series 127, European Systemic Risk Board.

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