MMF Reform Proposals Threaten LVNAV Viability for European Treasurers
While treasurers might not feel the impact of MMF reforms in Europe for years, the proposed changes currently being debated at European Commission level endanger the utility of one of the most popular forms of MMF used by corporate investors across the continent.
For corporate treasurers wanting to diversify their short-term investments, MMFs have long been an attractive instrument to use due to their ability to preserve capital, provide cash liquidity, and even generate yield.
François Masquelier, CEO, Simply Treasury, and Chair of ATEL (the Luxembourg Corporate Treasury Association), elaborates: “MMFs remain a key element of the economy, particularly for corporates with excess cash that need to mitigate their risk. To avoid concentrating it all in bank deposits, MMFs are a classic alternative instrument. We don’t have many potential alternatives, given treasury asset management policies, liquidity needs, cash equivalent accounting constraints and restrictions imposed by the C-suite.”
CEO, Simply Treasury, and Chair of ATEL (the Luxembourg Corporate Treasury Association)