The European Commission has today launched a targeted public consultation to evaluate the adequacy of EU rules on money market funds (MMF), an important source of short-term financing for companies and government entities. MMFs are investment funds that invest predominantly in short-term debt such as securities issued by banks, businesses or governments, thereby playing a key role in financing the economy.
The Money Market Fund Regulation, fully applicable since January 2019, is part of the EU’s post-crisis legal framework aimed at preserving the integrity and stability of the Single Market and reducing credit and liquidity risks in the MMF sector. These rules are in line with the international work on market-based finance.
The objective of today’s consultation is to seek feedback on the functioning of the regulatory framework and to collect data, in particular economic data, on the use of MMFs. Feedback gathered through this consultation will complement the input provided by the European Securities and Markets Authority (ESMA) and the European Systemic Risk Board (ESRB), as well as the information collected via other international initiatives (e.g. Financial Stability Board).
The MMF Regulation requires the Commission to submit a report to the European Parliament and the Council assessing the adequacy of the MMF Regulation from a prudential and economic point of view. This should be based on a robust and comprehensive evaluation of current rules. The answers to this consultation will feed into the Commission’s report. The consultation runs until 13 May. For more information, see the full text of the MMF Regulation.