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EU May Require Cash Buffer for Money Funds

European regulators consider tighter restrictions on funds.

By Jim Brunsden, Bloomberg | Updated on March 29, 2013

Money-market funds may be forced by European Union regulators to hold minimum levels of liquid assets, and in some cases to hoard cash reserves, as part of a bid to toughen oversight of the $4.7 trillion global industry.

Michel Barnier, the EU’s financial services chief, may require money-market funds that maintain a fixed share price to build up a cash “buffer” equivalent to 3 percent of their assets, according to draft proposals obtained by Bloomberg News. Barnier has identified regulation of money-market funds as a priority in the bloc’s efforts to rein in so-called shadow banks.

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