Daily Management Review

The Bank of France Chief Calls For ‘Liquidity Stress Tests’ For ‘Investment Funds’


04/26/2018


In order to gage the capacity to handle crisis, ere the liquidity dries up in the face of a “new crisis”, the Central Bank of France urges for “liquidity stress tests”.



The Central Bank’s chief of France, on Wednesday, 25 April 2018, called for investment funds’ “broad-based liquidity stress tests” in an attempt to gather their capacity to deal with “shocks in a financial crisis”.
 
Following the financial crisis of “2008 and 2009”, the number of “non-bank financial actors” managed assets has soared up, whereby heightening concerns of “some regulators” in fear of sudden drying up liquidity in the face of a “new crisis”. The Financial Stability Board recommended last year a “system-wide tests”, even though “many funds” have internal mechanisms in place to “conduct stress tests”. However, the tests conducted by the Financial Stability Board have “found little traction so far”.
 
The Governor of Bank of France, Francois Villeroy de Galhau, expressed his regret on the resistance of the U.S. towards the idea of “broad-based, macro stress tests”. In his words:
“To measure the global impact of shocks, we need in particular to have macro stress tests of liquidity, including for investment funds”.
“These actors are potentially vulnerable to runs in case of a market shock if they are open and don’t have a way of capping buybacks”.
 
While, the Head of the “French financial markets regulator”, Robert Ophele is of the opinion that if the refusal of the U.S. towards committing the “stress- testing of asset managers” would pose difficulty in getting a “clear picture of contagion risk”. However, in reference to this, Ophele also stated that “rather than system-wide macro stress tests, it would be better to concentrate on more focussed stress tests”, as per Reuters’ report.
 
References:
reuters.com







Science & Technology

Fast Company: Apple isn't the most innovative anymore

U.S. Space Program Could Be Delayed Due To SpaceX, Boeing Design Risks: Reuters

What trends will be affecting the health sector in the coming years?

Deloitte identifies main cyber threats for power industry

Zenuity To Take Self Driving Car Road Test In Sweden With Permission

Researchers: Half of Facebook users is fake

Amazon’s Ring gets in a privacy scandal

Facebook Is Creating A Stablecoin For Its WhatsApp Users

IBM offers to use the first quantum computer

Passport Numbers Of 5 Million Customers Hacked: Concedes Marriott

World Politics

World & Politics

AirHelp expects up to 33 th of cancellations and flight delays per day all over the world in 2019

Far-right and Catalonia: New elections in Spain

Trump is losing rating because of shutdown

Hanoi, Vietnam Chosen As Place For 2nd Summit Between Trump And Kim Jong-Un

US, China to hold new negotiations in Beijing

Human Rights Not To Be Dissociated From Stability, Macron Tells Sisi

Brexit Hijack Is Not The Parliament’s Right

Macedonia ignites political crisis in Greece