EU Money Market Fund Regulation works well – no need for reform

Money market funds (MMFs) play a key role in the liquidity management of non-financial corporations. As an important cash management tool they allow corporates to deposit their short-term cash balances in a secure manner and with quick access to their funds when needed. 

In our paper, we strongly support that the existing MMF Regulation has explicitly been structured in order to allow for CNAVs and LVNAVs as efficient, safe and easy-to-use means of cash management. Changes to regulatory framework would undermine the political will of the last reform. In particular, the LVNAV class was deliberately created as a good compromise between practicability and the limitation of possible risks. The fact that the class is well accepted in the market (according to the ESMA report) shows that the reform at the time set the right course.