Cash & Liquidity Management
Published  21 MIN READ
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The European Commission’s Proposals on the Regulation of Money Market Funds

Position papers from EACT and IMMFA

The EACT has published a position statement commenting on the European Commission's proposed Money Market Funds regulation. The EACT argues that for the real economy there is one fundamental flaw in the proposal - the bar on the use of external credit ratings. The EU’s intention to require CNAV funds to hold a capital buffer is also highlighted as a measure that is likely to make the CNAV product unviable; the EACT proposes instead improvements in disclosure and the use of liquidity gates and fees, the combination of all of which would better support the real economy than introducing capital buffers.

The EACT argues that for the real economy there is one fundamental flaw in the proposal - the bar on the use of external credit ratings. The EU's intention to require CNAV funds to hold a capital buffer is also highlighted as a measure that is likely to make the CNAV product unviable; the EACT proposes instead improvements in disclosure and the use of liquidity gates and fees, the combination of all of which would better support the real economy than introducing capital buffers.