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Mr. Frank Hespeler and Felix Suntheim
This note analyzes the stress experienced (and caused) by open-end mutual funds during the March COVID-19 stress episode, with a focus on global fixed-income funds. In light of increased valuation uncertainty, funds experienced a short period of intense withdrawals while the market liquidity of their holdings deteriorated substantially. To cover redemptions, afflicted funds predominantly shed liquid assets first—for example, cash, cash equivalents, and US Treasury securities. But forced asset sales amplified price pressures in markets and contributed to liquidity falling across fixed-income markets. This drop in market liquidity, as well as the general stress in financial markets, may have led to fund investors becoming even more sensitive to challenging portfolio performance and encouraged further withdrawals. Only after central banks intervened, directly and indirectly supporting asset managers, did liquidity and redemption stress subside. Overall, the March episode validated the financial-stability concerns about liquidity vulnerabilities in the fund industry and calls for further action to address them.
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Mr. Frank Hespeler and Felix Suntheim
This note analyzes the stress experienced (and caused) by open-end mutual funds during the March COVID-19 stress episode, with a focus on global fixed-income funds. In light of increased valuation uncertainty, funds experienced a short period of intense withdrawals while the market liquidity of their holdings deteriorated substantially. To cover redemptions, afflicted funds predominantly shed liquid assets first—for example, cash, cash equivalents, and US Treasury securities. But forced asset sales amplified price pressures in markets and contributed to liquidity falling across fixed-income markets. This drop in market liquidity, as well as the general stress in financial markets, may have led to fund investors becoming even more sensitive to challenging portfolio performance and encouraged further withdrawals. Only after central banks intervened, directly and indirectly supporting asset managers, did liquidity and redemption stress subside. Overall, the March episode validated the financial-stability concerns about liquidity vulnerabilities in the fund industry and calls for further action to address them.
Mr. Frank Hespeler and Felix Suntheim

Morningstar data—amounted to outflows from the global fixed-income fund sector of $481 billion in March 2020. Even money market funds, which are generally less exposed to credit risk, were affected: in particular, US prime money market funds faced several weeks of large redemptions, while government money market funds saw inflows as investors sought the safety and liquidity of government securities ( Figure 1 , panel 2, right side). Figure 1. Asset Sales, Fund Flows, and Liquidity Sources: Board of Governors of the Federal Reserve System; Morningstar; and Refinitiv

Laura Jaramillo, Anke Weber, and Ms. Martine Guerguil

While many studies have looked into the determinants of yields on externally issued sovereign bonds of emerging economies, analysis of domestically issued bonds has hitherto been limited, despite their growing relevance. This paper finds that the extent to which fiscal variables affect domestic bond yields in emerging economies depends on the level of global risk aversion. During tranquil times in global markets, fiscal variables do not seem to be a significant determinant of domestic bond yields in emerging economies. However, when market participants are on edge, they pay greater attention to country-specific fiscal fundamentals, revealing greater alertness about default risk.

International Monetary Fund

easier after trust and company legislation is reformed. Lastly, processing centers should find support in a cluster of Universal Processing Centers and supporting technology companies. The policy approach is one of lowering costs where possible through investment in infrastructure or legal changes for the benefit of the businesses involved. 13 26. Recent increases in institutional funds under management in Singapore have been due to the transfer there of regional portfolios previously managed abroad . Nondiscretionary, mostly fixed-income fund rose by 36 percent in

International Monetary Fund

Foreign Capital Fixed Income Fund became subject to a financial transaction tax of 5 percent, payable at the time capital enters the country. The proceeds of foreign borrowings through the placement of notes, bonds, and commercial paper—when converted into local currency—was also made subject to a transaction tax of 3 percent. In December 1993, a uniform withholding tax of 15 percent was also imposed on profits, dividends, and bonuses for all foreign capital. The effect was immediately visible, with new bond issues falling sharply in the first quarter of 1994. An

International Monetary Fund. Monetary and Capital Markets Department
This technical note on the risk assessment for Thailand discusses that the Thai banking system shows a substantial resilience to severe shocks. The solvency stress tests indicate that the largest banks can withstand an adverse scenario broadly as severe as the Asian financial crisis. While three banks would deplete their capital conservation buffer (CCB) under the adverse scenario, recapitalization needs would be minimal. A battery of complementary sensitivity stress tests, which allows to cover in more detail certain risk factors, also confirmed the overall picture of a resilient baking system: no particular vulnerability emerged from the analysis of the bond portfolio to an increase in government and corporate spreads, exposure to foreign exchange risk, and concentration risk in the loan portfolio, with the possible exception of one entity with a particular concentration on single-name exposures. The liquidity stress test on investment funds (IFs) showed that they would be able to withstand a severe redemption shock and its impact on the banks and the bond market would be limited.
Jang-Yung Lee and William E. Alexander

measures adopted in November 1993 nonresident investment in the newly created Foreign Capital Fixed-Income Fund (FRF-CE) was subject to a financial transaction tax (IOF) of 5 percent, payable at the time the capital enters the country. Also, the proceeds of foreign borrowings through the placement of bonds, notes, and commercial paper, when converted into domestic currency, were made subject to a financial transaction tax (IOF) of 3 percent. In addition, a uniform 15 percent withholding tax on profits, dividends and bonuses was established for all foreign capital