Do Liquidity Limits Amplify Money Market Fund Redemptions During the COVID Crisis?

Regulation of Money Market Funds (MMFs) in the EU requires some categories MMFs to consider applying liquidity management tools if they breach a minimum ‘weekly’ requirement. Anticipation application such is plausible amplifier run risks. Using larger European dataset than previously studied, we assess whether proximity thresholds explains differences redemptions both at start COVID-19 crisis and following months. We this effect for subject exempt from regulation. The evidence shows that outflows can be robustly associated with requirements peak funds required suspending breaches occur. In post-crisis phase redemption-liquidity relationship does not appear specifically related mandated consideration suspension redemptions. supports countercyclical or buffers are more usable times stress. JEL Classification: G01, G15, G23, G28, G18, G20, F30