The London-based Institutional Money Market Funds Association, or IMMFA, a group which represents U.S.-style money funds in Europe, issued a press release this morning which says, "A research report published jointly today by the Institutional Money Market Funds Association (IMMFA) and PwC Luxembourg shows that triple-A rated funds have deepened the money markets, by virtue of the volume and proportion of assets held by the funds. The 30-page report, entitled, "The contribution of IMMFA funds to the Money Markets: A report commissioned to PwC by the Institutional Money Market Funds Association (IMMFA)," claims that "IMMFA funds have enabled significant growth of the Commercial Paper (CP) market."

The IMMFA press release explains, "As at June 2010, IMMFA funds held over 16% of the outstanding Euro-denominated CP (EUR 33 bn), 5% of outstanding US dollar-denominated CP (EUR 35 bn) and EUR 37 bn of Sterling-denominated CP. Additionally, IMMFA funds helped develop the market for Certificates of Deposit (CDs). The funds more than quadrupled their market share of outstanding Euro-denominated CDs over the past five years, to 8% as at June 2010 (EUR 29bn), and concurrently almost doubled their market share in US dollar-denominated CDs to 6% (EUR 62 bn), during a period of substantial growth in the size of both markets. The report concludes that continued growth of IMMFA funds is likely to result in further enhancements to the money markets."

Chief Executive Gail Le Coz comments, "This research report confirms the important and positive role of IMMFA funds. By purchasing short-term debt, deposits and Treasury bills, IMMFA funds provide key funding for companies, governments and households on a daily basis. These funds make a major contribution to the money markets and therefore to the European and the American economies."

Dariush Yazdani, Head of the Asset Management Research unit of PwC Luxembourg, says, "The triple-A rated Money Market Funds represented by IMMFA are an intrinsic component of the money markets. It is evident from the data that IMMFA funds help facilitate several short-term debt markets, and if growth in assets follows the rising trend, they should remain a key participant in the money markets."

The IMMFA/PwC Report says, "Money Market Funds (MMFs) have grown to represent almost one third (EUR 5.8 tn) of the global funds industry at their recent peak. Within this segment, IMMFA funds alone have almost doubled their assets under management (AUM) over the last five years, accounting for EUR 458 bn by mid-2010. MMFs perform a vital role within the global economy. By purchasing commercial paper (CP), deposits and treasury bills (T-Bills), MMFs provide key funding for companies, governments and households on a daily basis. On a macroeconomic level, we have found that IMMFA funds contribute significantly to M3 in various economic regions, particularly the UK. These funds contribute: 6.5% of M3 to the UK economy; 1.8% of M3 to the US economy; and 1.5% of M3 to the Eurozone economy."

It adds, "Specifically within the money markets, IMMFA funds have deepened the CP and certificate of deposit (CD) markets, particularly in Europe. The volume of CP and CDs held by IMMFA funds has increased dramatically compared to the market size over the last five years. However, due to a larger and more liquid market for other money market instruments, IMMFA funds have not as yet had the same impact on the T-Bill, repurchase agreement (Repo), time deposit (TD) or floating rate note (FRN) markets."

The study includes some background on IMMFA money funds and includes statistics on the sizes of various money market segments in Europe. Finally, the PWC report says, "Approximately 90% of the global MMF market is divided between the US and European money markets, with the US share forming approximately two thirds of this. Within the European region, France, Luxembourg and Ireland hold 86% of MMF domiciliation between them."

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