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© Reuters. FILE PHOTO: Monetary Stability Board (FSB) Chair Klaas Knot arrives for the G20 Leaders’ Summit in Bali, Indonesia, November 15, 2022. Mast Irham/Pool by way of REUTERS
FRANKFURT (Reuters) – The Monetary Stability Board, a world danger watchdog, plans to problem new liquidity suggestions for some investments funds after bouts of stress in recent times risked spreading over to the broader monetary sector, the pinnacle of the FSB stated on Thursday.
“Trying forward, we are going to quickly problem coverage suggestions to deal with liquidity mismatches in open ended funds,” Klaas Knot, the pinnacle of the FSB and the governor of the Dutch central financial institution stated in a speech on Thursday.
Open-ended funding funds have a tendency to take a seat on long run property however their buyers usually have the choice for short-term redemptions, making a liquidity mismatch in durations of excessive stress.
Many open-ended funds, significantly these with greater exposures to credit score danger, confronted substantial redemption pressures in early 2020, when the monetary system was struggling to deal with the impression of the pandemic.
FSB suggestions are usually not binding however function very important tips for native regulators and supervisors setting floor guidelines.
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