In the euro area, even as the European Central Bank has assumed responsibility for monetary policy, some national central banks or other national authorities have retained substantial supervisory powers. Various other institutional arrangements exist around the world, including the more traditional model in which the central bank also serves as a supervisor of the banking system.
To the extent these asset sales impact market prices or are sold at fire sale prices, the net asset value of the portfolio declines. These new findings on the greater vulnerability of leveraged funds to potential investor runs support the idea that mismatches between the portfolio liquidity and redemption terms of leveraged funds are undesirable for more leveraged funds from a macroprudential perspective.