MMFs are a type of open-ended investment fund, considered to be a low-risk investment that gives investors credit risk diversification and a place to hold, rather than grow, their assets.

In March 2020, financial markets reacted to the Covid pandemic with increased selling pressure, volatility and illiquidity. MMFs came under severe strain across major currencies, including in sterling, as investors quickly sought access to cash.

There is concern amongst authorities that underlying vulnerabilities within MMFs and threats to financial stability remain. Financial Stability Board (FSB) members, including the UK, agreed to assess and address the vulnerabilities that MMFs pose in their country.

This joint Discussion Paper (DP) aims to gather views to inform the UK’s authorities’ development of MMF reform proposals.

We are inviting feedback on the reform options discussed in the DP by 23 July 2022. We will consider this in deciding whether to consult on MMF reform proposals.

The FCA is also doing what it can now to deal with MMF resilience and is issuing new non-handbook guidance on the UK MMF Regulation.