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CP and CDs markets: a primer

Author

Listed:
  • Matteo Aquilina
  • Andreas Schrimpf
  • Karamfil Todorov

Abstract

Commercial paper (CP) and certificates of deposits (CDs) are important short-term funding instruments for both financial and non-financial entities. We describe the origins and evolution of these markets in major jurisdictions. We show that money market funds (MMFs) are still significant as investors in CP and CDs, although their footprint has shrunk in response to stricter regulation. Various players have filled the gap left by MMFs, with non-financial companies and banks being particularly important in Japan, and non-bank financial institutions in the United States. Historically, US MMFs' absorption of short-term paper has tended to fall during stress episodes, creating strains for issuers in search of dollar funding, such as European banks.

Suggested Citation

  • Matteo Aquilina & Andreas Schrimpf & Karamfil Todorov, 2023. "CP and CDs markets: a primer," BIS Quarterly Review, Bank for International Settlements, September.
    • Handle: RePEc:bis:bisqtr:2309e
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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