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Financial Stability Review, May 2022

The European Central Bank (ECB) is the central bank of the 19 European Union countries which have adopted the euro. Our main task is to maintain price stability in the euro area and so preserve the purchasing power of the single currency. ....

Region Flamande , United States , United Kingdom , Czech Republic , Frankfurt Am Main , Lieven Hermans , Lorenzo Pangallo , Annalaura Ianiro , Martina Spaggiari , Matilda Gjirja , Katharina Cera , Van Robays , Michal Dvo , Barbara Meller , Julius Schneider , Olimpia Carradori , Luca Mingarelli , Linda Fache Rousov , Markus Behn , Michael Wedow , Dominik Vu , Dilyara Salakhova , Othman Bouabdallah , Sujit Kapadia , David Lodge , Peter Welz ,

Financial Stability Review, May 2021


Financial Stability Review, May 2021
Foreword
This is the third issue of the Financial Stability Review (FSR) prepared in the context of the coronavirus COVID-19 pandemic, with many euro area countries having faced a third wave of infections. As a result, a vast number of firms – particularly those in the services, leisure and travel sectors – still cannot operate normally, and the economy is still reliant upon policy support to prevent widespread unemployment, corporate insolvencies and economic contraction. The human and economic costs of the pandemic continue to accrue.
That said, vaccination programmes are progressing and offering a route out of the pandemic. Financial markets have been driven by expectations of an upswing, exemplified by a striking rally in global equity markets. We are optimistic that financial and economic conditions will bounce back. There is, however, a reality that the pandemic will leave a legacy of higher debt and weaker balance sheets, ....

United States , Hong Kong , United Kingdom , New Zealand , Frankfurt Am Main , South Sea , Brunei General , New Brunswick , Lieven Hermans , Martina Spaggiari , Allianz Euler Hermes , Katharina Cera , Michal Dvo , Mara Pirovano , Tobias Helmersson , Olivia Chi , Luca Mingarelli , Christophe Van Nieuwenhuyze , Linda Fache Rousov , Sean Osullivan , Dejan Krusec , Algirdas Prapiestis , Dilyara Salakhova , Danilo Vassallo , Sujit Kapadia , Spyros Alogoskoufis ,

Investment funds' procyclical selling and cash hoarding: a case for strengthening regulation from a macroprudential perspective


Date
Prepared by Katharina Cera, Linda Fache Rousová, Angelica Ghiselli, Christoph Kaufmann and Sean O’Sullivan
During the March 2020 market turmoil, investment funds shed assets on a large scale – but was this selling commensurate with the outflows they faced or was it much larger? This box finds evidence of the latter, highlighting that the less regulated non-UCITS funds tended to engage in more procyclical selling and cash hoarding than UCITS funds.
[1] While it can be rational for fund managers individually to sell assets in excess of current outflows when uncertainty about future redemptions is high, such cash hoarding may be detrimental to the stability of financial markets from a macroprudential perspective. ....

Katharina Cera , Christoph Kaufmann , Linda Fache Rousov , Sean Osullivan , Angelica Ghiselli , Refinitiv Lipper , Financial Stability Review , காதரின சிஇஆர்ஏ , கிறிஸ்டோஃப் காஃப்மந் , சீன் ஓசுள்ளிவண் , நிதி ஸ்திரத்தன்மை விமர்சனம் ,