Fundamental reforms are needed to bolster investment funds to prevent a repeat of the financial market turmoil triggered by the coronavirus pandemic, the IMF said on Friday.

Central banks were forced to intervene aggressively to restore order after sharp price falls across financial markets in the first quarter of 2020 were amplified by heavy selling by fund managers, who dumped stocks and bonds when their clients rushed for the exit.

“We need to boost the resilience of investment funds to safeguard financial stability and to better protect markets and economies from crippling capital outflows,” said Tobias Adrian, the IMF’s director of monetary and capital markets.

Along with proposals for an array of new liquidity management tools for asset managers, the IMF said policymakers should consider whether to change the current rules that permit investors to make daily withdrawals from nearly all types of mutual…

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