As regards liquidity mismatches, this year’s policy recommendations by the Financial Stability Board (FSB) to address structural vulnerabilities from asset management activities9 have been an important step in the right direction. The recommendations permit authorities to indicate adequate liquidity risk management tools in extraordinary circumstances to open-ended funds. This also includes the suspension of redemptions in times of stress.
The discussions at the recent IMF meetings confirmed a negative outlook, although demand stimuli and natural stabilisers are expected to start having an impact later in the year, and there are tentative signs that this may be the case.