With regard to investment funds, “liquidity spirals” remain a risk. 18 Such spirals could be triggered if funds were to be confronted with high redemptions 19 or increased margin requirements, as these could result in forced selling on markets with low liquidity.
To address such risks, guided stress tests could be developed jointly by ESMA, ECB and ESRB, together with national competent and macroprudential authorities, and additional intervention powers for competent authorities to deal with large scale redemptions should be discussed.