Monitoring vulnerabilities
The EU’s rules for money market funds have “overall successfully passed the test” and don’t require any legislative fixes, the European Commission said in a report in July last year.
The EU framework “comprises robust fund and liquidity rules, ongoing disclosures, regular stress testing and reporting for a close monitoring by competent authorities,” a Commission spokesperson said.
“It also identifies certain vulnerabilities in the market for MMFs and areas which would merit further assessment.”
EU officials relayed that laid-back stance after their U.K. counterparts raised the issue at an October forum — the first since Brexit — to discuss financial regulatory issues. With the European election looming in June, Brussels won’t even consider legislation until at least the end of this year.
Britain has been trying to apply pressure. As well as raising the issue via Brussels, U.K. authorities like the BoE are talking directly to the Irish and Luxembourg watchdogs, although they may have limited scope to act alone. And the U.K. is pushing for wider international reforms through global regulators like the Financial Stability Board.
“There will be pressure directly or indirectly,” said the U.K. official.
