Some large reserve managers eschew liquidity stress tests

Majority of central banks test for thin trading, but three in 10 larger managers do not

The majority of central banks apply liquidity stress tests to their foreign exchange reserves, but the practice is not yet standard, even among banks that have large portfolios.

During volatile trading in March, many markets seized up – even for supposedly liquid instruments such as US Treasury bonds. At the time, many reserve managers identified this sudden illiquidity as the most challenging aspect of the first phase of the Covid-19 crisis. The stresses were only alleviated after massive

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