Discussion Paper

Preemptive Runs and the Offshore U.S. Dollar Money Market Funds Industry

Abstract: In March 2020, U.S. dollar-denominated prime money market funds (MMFs) suffered heavy outflows as concerns about the COVID-19 pandemic increased in the United States and Europe. Investors redeemed their shares en masse not only from funds domiciled in the United States (“domestic”) but also from offshore funds. In this post, we use differences in the regulatory regimes of domestic and offshore funds to identify the impact of the redemption gates and liquidity fees recently introduced as part of MMF industry reforms in both the United States and Europe.

Keywords: money market funds; offshore run; redemption gates; liquidity fees; weekly liquid assets (WLA);

JEL Classification: G1; I18;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Liberty Street Economics

Publication Date: 2021-11-22

Number: 20211122