The European Commission wants to introduce measures to limit the risks of shadow banking. A first step in this process is a proposed set of rules for money market funds.
These new rules are aimed at improving the liquidity and stability of these funds. A 3% liquidity buffer is introduced for certain types of money market funds.
Shadow banks conduct banking-related activities and are not regulated. The Commission has concerns about shadow banking because of the size of this sector and the close connection between the activities of shadow banks and those of the regulated banking sector.
