for cash, and the implications of the pandemic for the economic outlook. other central banks took similar decisions around the same time. this helped to stabilise markets and reversed the dash for cash and thus the flows out of money market funds. second, the bank activated its contingent term repo facility on 24th march, committing to lend unlimited amounts of reserves at close to bank rate against a broad range of collateral. taken together, these operations brought money market rates back to more normal levels. the federal reserve in the us also launched a specific liquidity facility aimed at easing the stresses in dollar denominated mmfs. turning the fire hoses on at full blast worked and cured the immediate problem. it is always worth remembering that all of this happened at a time of a global pandemic and a historically unprecedented collapse in economic activity. so, it is hardly surprising that large and rapid actions were necessary. it helped that the situation in respect of both monetary and financial stability called for such actions, so there was no conflict between the two. moreover, this was an international shock, in at least two important respects. first, by its nature the global pandemic was affecting a very large number of economies and financial markets. second, money market funds, and particularly dollar denominated funds, provide funding to a wide range of banks internationally and are used for cash management by investors and corporates across the world. for instance it is common for us funds to buy dollar paper issued by european banks, and vice versa. so the transmission of the dash for cash was not constrained by borders or national markets. us prime mmfs saw large outflows, with net redemptions of 30 % from prime mmfs offered to institutional investors over a two week period ( president ’ s working group, 2020 ). this contributed to the effective closure of the market for short - term dollar funding ( fsb, 2020 ). us government mmfs, on the other hand, saw huge inflows over the same period. a similar pattern was also seen in dollar denominated mmfs in europe. 3 / 6 bis central bankers'speeches the important conclusion i draw from this review of the experience of the dash for cash is that while we can reasonably conclude that the actions taken meant that the immediate problem was tackled, in doing so some serious issues which represent a threat to the stability of the financial system were revealed. hence, it is right that a very large amount of effort is going towards tack

like funds and investment funds. we should remove the ambiguity of intermediate descriptions such as low volatility funds. third, and to support removing the ambiguity, it will be important to define in an accounting and substantive sense more explicitly what constitutes cash - like. current guidance leaves a lot of judgement to managers and auditors to make these decisions on a fund by fund basis1. money - market funds are a cash management instrument, so it may seem odd that the meaning of cash - like as a term has not been well defined. the resultant ambiguity may have seemed convenient as a means to stretch the boundary of the definition to allow less liquid instruments in, but when a stress event like the dash for cash happens, the flaw is badly exposed and financial stability is in jeopardy. the authorities then have to intervene in scale to restore well - functioning markets, but that should not be the accepted way to run the system. 4 / 6 bis central bankers'speeches that said, the definition of cash - like therefore needs to be clear and appropriate rather than overprescriptive. for many purposes it does need to provide near instant access to cash – i. e. quick redemption of a holding in a money market fund should be assured. but there are situations where, say, holding a three month tenor instrument is appropriate because it satisfies treasury management objectives. the critical need is to avoid ambiguity of definition and mismatches between an instrument ’ s liquidity and its use. funds that do not meet this requirement should be clearly labelled and treated as part of the investment fund world, serving a different purpose ( where there are also issues, but these are not my focus today ). you may well say “ he really is labouring this point ”. yes i am, because the post financial crisis reforms did not tackle it conclusively. so, what reforms are required to establish money market funds as cash - like without ambiguity? the first thing to say is that no single reform will solve things on its own. we must identify a coherent package of reforms that address the current vulnerabilities in the money market fund sector. it is easiest to describe three broad approaches to illustrate the potential options available that could deliver this objective. these are intentionally somewhat stylistic, to draw out the tradeoffs we face in addressing these issues. first, at one extreme, asset holdings could be limited to government instruments. given the low risk and liquid nature of these instruments, run risk would be materially reduced. the existing