NON-PUBLIC DEBT EU MMFS MUST BE REREGULATED TO ALLOW FOR GREATER SHOCK ABSORPTION CAPACITY
Post Date: 01 July 2021
EU Money Market Funds underwent quite a bit of stress during the COVID induced financial crisis in 2020. To prevent such stress occurring again, discussions are underway to reform Money Market Funds in both the US and Europe.
But what is the best solution? Money Fund play a vital role in keeping the financial system stable. They are the tool par-excellence for retail investors to spread the risk of their cash investments. Are Gates and Fees a good solution? Or are they bad outcome that limits the growth of these funds? Should EU Money Market Funds have access to a buyer like the ECB, at times of stress, that will buy their "ECB Eligible" Investments when needed to allow these funds to pay out cash to retail investor that draw on these funds because the crisis is requiring them to do so?
The Eurosystem, that is the monetary authority of the eurozone consisting of the ECB and the national central banks (NCB) of the 19 member states that are part of the eurozone, have given their recommendations to ESMA on the regulation of Money Market Funds in the EU.