The Central Bank of Ireland (the CBI) recently published a consultation paper on Guidance on Money Market Fund Weekly Liquid Assets levels (CP168).
The consultation is a joint initiative with the French AMF and Luxembourg CSSF and it proposes national guidance for enhanced money market fund (MMF) liquidity risk management practices. The proposals are informed by and consistent with the European Commission’s May 2026 report on the adequacy of MMFR and accompanying FAQ (Commission Report).
CP168 sets out proposals around market resilience levels which involve an increase in the level of MMF weekly liquid assets (WLA) above the levels set by the Money Market Funds Regulation (Regulation (EU) 2017/1131) (MMFR). In addition, CP168 sets out draft guidance on the CBI’s expectations for MMF managers to adapt their liquidity risk frameworks in line with these WLA levels and on enhanced supervisory engagement where WLA levels fall below the market resilience levels for a period exceeding 10 business days.
Background
MMFs play an integral role as a fund product for cash management and a vital source of short-term financing for investors such as treasury functions of corporates, banks and governments. The MMFR lays down a comprehensive regulatory framework regarding the authorisation and operation of MMFs established, managed or marketed in the European Union.
Proposed Increase to Weekly Liquid Assets (WLA) Levels
Under the MMFR, MMFs must hold enough liquid assets so they may meet redemption requests and better prevent their assets from being liquidated at heavily discounted prices to do so. These liquid assets are bucketed into those that mature or can be converted into cash within one working day (daily liquid assets; DLA) or five business days (weekly liquid assets; WLA).
The CBI is proposing an increase to the MMFR minimum WLA levels for MMFs as set out below. No changes are proposed to the minimum DLA levels in the MMFR. These levels are consistent with those recommended in the Commission Report and the planned levels recently announced by the FCA.
| MMF Type | WLA in MMFR | CBI Proposal |
|---|---|---|
| Constant NAV (CNAVs) and Low Volatility NAV (LVNAVs) | 30% WLA | 40% WLA |
| Variable NAV (VNAVs) | 15% WLA | 20% WLA |
Guidance on Liquidity Risk Management
In the proposed guidance, the CBI sets out its expectations that MMF managers should:
- align their liquidity risk frameworks to the WLA resilience levels proposed; and
- exercise enhanced vigilance over fund liquidity where WLA levels approach or fall below the minimum WLA resilience levels and have effective processes around escalation and decision making in these situations.
The CBI would also expect that where a MMF falls below the market resilience levels for a period exceeding 10 business days or where the MMF manager expects a prolonged and/or substantial deviation, the MMF manager should notify the CBI with relevant explanations and justifications.
Enhanced Supervisory Scrutiny and Engagement
The proposed guidance in CP168 also sets out actions the CBI may take if WLA of an MMF falls below the proposed WLA resilience levels. The CBI would initiate increased supervisory scrutiny and engagement with a relevant MMF manager where it identifies, or is notified of, WLA below applicable resilience levels. Also, at the onset of stressed market conditions affecting MMFs and for MMFs with WLA below applicable resilience levels, the CBI would undertake enhanced supervisory engagement with MMF managers. This may include requesting more frequent data on key risk indicators, daily reporting and other key data points in relation to liquidity.
Under the proposals, the CBI would also undertake periodic engagement with MMF managers to gather more qualitative information as needed. For example, the impact of any CBI decisions on MMF ranges, trading volumes observed and main active counterparties, measures taken/planned on liquidity, observed and potential quarter-end effects. In addition, when deemed necessary, the CBI could request that MMF managers provide further ad-hoc data (for instance on current portfolio holdings and cash/deposits/repos).
Next Steps
This consultation was published on the CBI’s website on 8 June and is open until 3 August 2026.
Please contact any member of the William Fry Asset Management & Investment Funds team should you wish to discuss further.
