On 22 May 2024, the Financial Stability Board (FSB) published a report on Enhancing the Functioning and Resilience of Commercial Paper and Negotiable Certificates of Deposit Markets. The report forms part of the FSB’s work programme on enhancing the resilience of non-bank financial intermediation and follows up on the 2021 FSB report with policy proposals to enhance money market fund resilience.

The report analyses the functioning and vulnerabilities of commercial paper (CP) and negotiable certificates of deposit (CD) markets and sets out an analytical framework to assess the relative merits of potential market reforms to address these vulnerabilities. The analysis focusses on primary and secondary CP and CD markets in core funding jurisdictions (EU, Japan, United Kingdom, United States), including instruments issued in non-local currencies such as Eurodollars.

The analysis found that CP and CD markets generally function well in normal times but are susceptible to illiquidity in times of stress. The report outlines potential reforms to enhance the functioning and resilience of CP and CD markets which includes improving market microstructure; enhancing reporting and transparency; and expanding private repo markets for CP and CD collateral. The report also highlights that the idiosyncratic nature of CP and CD markets means that not all potential reforms may be appropriate or relevant for all jurisdictions.