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
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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