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Nematrian Reference Library

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ReferenceTitleLink
ECB (2015)The impact of negative short-term rates on the money market fund industryhere

Summary (partial)

"The prolonged period of low - and recently negative - short-term interest rates poses challenges for the money market fund (MMF) industry. However, while low returns dampen demand for these funds and reduce the overall size of the industry, conditions seem to have stabilised since the middle of 2014, with holdings of MMF shares in M3 showing positive flows. This box provides an overview of recent developments in the sector and analyses changes in the returns of these funds in the context of the low interest rate environment."


Additional Nematrian Commentary

This bulletin concludes that the environment remains challenging for the euro area money market fund (MMF) industry in mid-2015 due to the then prevailing low or even negative interest rate environment. However, the funds do not in general appear to have changed their business model or sought to radically change their investment stance in response to this environment.


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