Abandoning stable NAV turns European finance professionals off MMFs

Monaco - 27 September 2012

Just 12% of European treasurers say they would consider using MMFs with a fluctuating NAV.

Senior treasury and finance professionals in Europe would not use money market funds if regulatory reform removed the stable net asset value and allowed such funds to 'break the buck'.

This was the key finding of the "Treasury Verdict" session taken by a live audience poll of senior treasury and finance professionals at EuroFinance's 21st conference on International Cash and Treasury Management, held in Monaco. The session is sponsored by J.P. Morgan Treasury Services.

Only 12% of European finance professionals say that they would invest in MMFs if regulatory reform means that they lose their stable NAV status. As a short-term investment option, MMFs are traditionally only behind bank deposits in terms of popularity, so this represents a potential industry-wide shift in the way that corporates manage their cash.

Katharine Morton, EuroFinance's Managing Editor, says "Obviously the regulators have a tough balancing act on their hands when it comes to MMFs. They rightly want to ensure that this type of instrument is robust and has the confidence of the corporates that are using them. However, the stable NAV is vital for treasurers from a risk management perspective. Tamper with that and they risk critically undermining MMFs."

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