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

No 03/2022, Discussion Papers from Deutsche Bundesbank

Abstract: This paper documents significant cross-border effects of the 2014 US money market fund (MMF) reform on MMFs in the euro area. As US-based prime MMFs became less money-like due to the reform, euro area-based prime MMFs received large inflows from foreign investors. These cross-border flows were largely motivated by the search for stable net asset value instruments rather than by the introduction of gates and fees. Consistent with an easing of competitive pressure, institutional prime funds in the euro area reduced their risk-taking. However, the industry became more concentrated overall and more exposed to run risk from foreign investors. This risk materialized during the COVID-19-induced stress period.

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: 2022
New Economics Papers: this item is included in nep-eec, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdps:032022

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