Euro Area: Publication of Financial Sector Assessment Program Documentation-Technical Note on Investment Funds Regulation, Supervision and Systemic Risk Monitoring

International Monetary Fund

No 2025/212, IMF Staff Country Reports from International Monetary Fund

Abstract: This Technical Note focuses on Investment Funds Regulation, Supervision, and Systemic Risk Monitoring in the euro area (EA). It identifies data gaps and fragmentation as significant barriers to effective systemic risk monitoring at the EA level. Authorities are urged to adopt a unified reporting framework to facilitate data sharing and accessibility. Enhancing European Securities and Markets Authority’s (ESMA) resources is critical to strengthen its supervisory and risk monitoring capabilities, ensuring it can effectively use its current powers and drive policy convergence. These issues are being addressed at the European level through the Targeted European Commission Consultation on a macroprudential framework for Non-Bank Financial Intermediation. Responses to the consultation emphasize the need to reform the Money Market Funds regulation, improve liquidity and leverage frameworks for investment funds, and address resource constraints. The mission welcomes the ongoing macroprudential discussions, which have provided valuable insights and recommendations. Specifically, it suggests granting ESMA the authority to augment measures under Article 25 of the Alternative Investment Funds Management Directive and requiring cross-border reciprocation, while also considering a similar provision under the Undertakings for Collective Investment in Transferable Securities framework.

Keywords: alternative investment; management directive; data sharing framework; Investment funds regulation; Systemic Risk Monitoring activity; G. money market funds; Mutual funds; Stress testing; Systemic risk assessment; Liquidity risk; Financial sector stability; Europe (search for similar items in EconPapers)
Pages: 52
Date: 2025-07-25
New Economics Papers: this item is included in nep-eec and nep-inv
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