MMFs play an important role in the economy by providing short‑term funding to businesses and governments. These funds invest in high‑quality short‑term debt instruments and cash equivalents, enabling companies to manage large cash balances. The sector has grown significantly in recent years, and the EU is now a leading global destination for MMF investors.
The report provides, alongside the FAQs, key additional guidance and aims to support more consistent and well‑calibrated supervision of MMFs across the EU, strengthening the resilience of the sector. This will help MMF managers and competent authorities to identify situations that may require closer scrutiny, reducing the risk of contagion to the EU financial system and wider economy.
The EU’s MMF regulatory framework is in application since 2018. The Commission’s first report, published in 2023, found the framework had performed well over time, including during market stress, while noting that certain areas warranted further assessment.
Building on those conclusions, today’s analysis confirms that MMFs generally take a cautious approach, keeping liquidity reserves above the regulatory minimum.
The FAQs provide guidance on MMFs’ minimum liquidity levels and on how liquidity buffers may be used, particularly to meet rising redemption requests during times of market stress.
“Today we are providing clearer guidance on how money market funds should maintain and use liquidity buffers, particularly in times of market stress. This will support consistent supervision and further strengthen the resilience of money market funds, helping safeguard financial stability.”
