Presentation slides - Federal Reserve Bank of New York
Presentation slides - Federal Reserve Bank of New York
Presentation slides - Federal Reserve Bank of New York
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What is the Minimum Balance at Risk (MBR)?<br />
• The MBR is small fraction <strong>of</strong> an investor's balance.<br />
E.g., could be roughly 3 to 5 percent <strong>of</strong> an investor’s highest<br />
balance over the previous month.<br />
• MBR has no effect on an investors’ daily transactions in the<br />
fund…<br />
…as long as investor's remaining balance exceeds the MBR.<br />
But<br />
• Redemptions <strong>of</strong> the MBR itself are delayed for 30 days.<br />
‣ I.e., a redeeming investor leaves something behind in case there is<br />
trouble.<br />
• Moreover, redemptions cause the MBR to be in first-loss position<br />
(subordinated) if the MMF breaks the buck and is liquidated.<br />
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