European Commission report on the adequacy of the Money Market Funds Regulation from a prudential and economic point of view

The CSSF draws the attention of the industry to the publication on 11 May 2026 by the European Commission (EC) of its report to the European Parliament and the Council on the adequacy of the Money Market Funds Regulation (MMFR) from a prudential and economic point of view and the related frequently asked questions (FAQs) on the interpretation and implementation of certain legal provisions of the MMFR.

While the EC informs that the EU’s regulatory framework for money market funds (MMFs) continues to function well overall, it mentions that the market would benefit from additional guidance. In this respect, the report, together with the FAQs, provides additional guidance to support more consistent and well-calibrated supervision of MMFs across the EU, strengthening the resilience of the sector.

Most notably, the EC identified market resilience levels for MMFs in terms of weekly liquid assets (WLAs) that may serve as benchmarks for MMF managers, in particular in risk management roles, and national competent authorities in identifying situations that may warrant closer scrutiny and increased supervisory engagement.

Based on extensive data analysis, the report concludes that appropriate WLA benchmark levels are 20% for VNAV MMFs and 40% for CNAV and LVNAV MMFs, compared to a regulatory minimum WLA of respectively 15% and 30% for these MMFs.

The EC further notes that its analysis confirms that MMFs generally take a cautious approach by keeping liquidity reserves above the regulatory minimum. In this context, the FAQs mention that it can be necessary for the portfolio composition of an MMF to go beyond the regulatory percentages having regard notably to the requirements of the “know your customer” under Article 27, and the outcomes of the MMFs stress tests under Article 28 of the MMFR.