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Non-bank liquidity concerns neglected by regulation

Recent episodes of market stress have intensified calls for tighter regulation of non-banks, though some warn that to be successful these efforts will need to be driven by the US

by Barbara Pianese

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Non-bank liquidity concerns neglected by regulation

Image: Getty Images

The turmoil of March 2020, triggered by the onset of the Covid-19 pandemic, led to widespread redemption of investors’ shares from funds. The chaos resulted in renewed regulatory focus on the issue of liquidity at non-bank financial institutions.

During that month, sterling-denominated money market funds, a type of non-bank, saw outflows of around £25bn or 11 per cent of their total assets, according to a 2023 consultation paper published by the UK Financial Conduct Authority. The document found the outflows to be outsized compared with anything previously observed.

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Barbara Pianese

Barbara Pianese is the Latin America editor at The Banker. She joined from Mergermarket, where she spent four years covering mergers and acquisitions across Europe with a focus on the consumer sector. She holds an MA in International and Diplomatic Affairs from the University of Bologna having studied in Brazil and France as well.