Fixed-value euro money funds poised for disappearing act

EC’s dim view of share destruction leaves stable euro fund values impossible with negative yields

Fading from view: euro-denominated fixed-value MMFs could disappear by the end of 2018

European corporate treasurers are likely to lose access to one of the main homes for their cash – euro-denominated fixed-value money market funds (MMFs) – as these look set to disappear by the end of the year, at least temporarily.

This feared outcome is the result of current negative interest rates on the short-term debt instruments held by euro-denominated MMFs and an incoming ban on a mechanism that enables fund managers to maintain a stable value per share when rates are negative.

A letter

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