Brian Hayes MEP today welcomed the European Parliament’s approval of an EU Regulation on Money Market Funds as an important development in legislating the shadow banking sector in Europe.
“As lead negotiator in Parliament for the European People’s Party (EPP) on this file, I believe a balanced compromise has been agreed. This is a crucial first step before Parliament enters negotiations with the European Council for a final decision on the EU Money Market Funds Regulation.
“The file still requires more work but the Parliament text recognises that both parts of the MMF industry – Constant Net Asset Value funds (CNAV) and Variable Net Asset Value Funds (VNAV) – will continue into the future. Ireland is a leading European domicile for Money Market Funds with over €300 billion worth of assets held in CNAV Money Market Funds in Ireland.
“The Parliament’s agreement has replaced current CNAV funds with three new types of funds – Government CNAVs, Small Investor CNAVs and Low Volatility NAV funds. Additional safeguards will be applied to these funds to ensure that they can cope with market shocks.
“I have always taken the position that new financial regulation must not disproportionately affect a small number of small Member States. There has been a push from various EU lawmakers to completely eliminate CNAV funds as they consider them a threat to financial stability. Yet no CNAV fund in the EU has ever ‘broken the buck’ or returned less than its share price to investors. These funds are very important to the financing of large businesses, charities, local authorities and pension funds.”