- The European Parliament put Neena Gill MEP’s proposals into law to protect taxpayers against having to bail out corporations if times get tough.
- The new EU financial legislation seeks to stabilise markets and boost economies across Europe through new regulations for Money Market Funds (MMFs).
- This legislation makes MMF funds more transparent, liquid and stable in order to prevent this happening again.
“This is a vital step in stabilising markets across Europe” said Neena Gill MEP who, as the lead MEP on this legislation for the European Parliament's Economic and Monetary Affairs (ECON) Committee, has been a key voice in shaping this legislation.
“In my constituency I saw the detrimental effects of the 2008 economic crash and the burden that was put on local authorities and taxpayers – this legislation will help to reduce the risks of this happening again. Normal hard-working people should not have to foot the bill for large corporations who expect governments to pick up the pieces when times get tough”
The legislation creates new regulations for Money Market Funds (MMFs) which represent a one trillion euro industry. The funds are used as a cash management tool by a variety of different organisations from small charities to large multi-nationals. They are used by many as a safe and reliable place to store cash until the next payroll as they offer a low-risk, low-return short-term investments. They are also important for holding short-term debts for banks, local authorities and central government – helping to make the European economy less reliant on bank funding.
Neena added: “I used to run a housing authority and I know that funds like these offer them a low-risk way of investing their money. That’s why it was really important to make sure we didn’t kill these funds but diversified and stabilised them.”
“It has been a hard-fought battle getting this legislation to pass - I consulted with businesses, parties from the left and right and top economic advisers to come up with reforms that are good for business, the economy and most importantly EU Citizens.”
Investing in MMF shares is often seen as a substitute for a bank deposit and MMFs offer many features comparable to bank deposits.
During the 2008 crisis, investors, primarily the large private sector companies, withdrew their cash rapidly, leaving the taxpayer with the heavy burden of supporting the funds. This legislation makes these funds more transparent, liquid and stable in order to prevent this happening again.