© Reuters. FILE PHOTO: A general view of the Bank of England in the City of London, Britain, September 25, 2023. REUTERS/Hollie Adams/File PhotoLONDON -The Bank of England said on Tuesday that money market funds should hold"significantly" higher amounts of liquid assets to cope with market volatility after the sector struggled with a"dash for cash" during the COVID-19 pandemic.
The FPC said staff analysis suggests that assets which mature with 7 days or less should make up at least 50% to 60% of a fund's total assets. This compares with current levels of 45% to 55% across the sector. The BoE, along with global watchdogs like the Financial Stability Board and U.S. Securities and Exchange Commission, is becoming increasingly concerned about the need to tackle the opacity and liquidity vulnerabilities in the sector.
In a special report on fleshing out the FPC's approach to assessing risks in market-based finance, it said it could enhance and review how it prioritises risk assessment.