From Reuters:
Europe's money market funds fear the twin threat of being charged to park cash at the European Central Bank and tougher regulation could push them to the brink of extinction.
The industry is worth around 850 billion euros, but the funds, which traditionally buy only top-rated, short-term debt, are finding life increasingly difficult as record low rates leave them struggling to make a profit.
The health of money market funds is also important for the region's governments and banks for which they are a reliable source of funding.
Almost 400 of the 1,555 funds that existed at the start of 2011 have closed, and with the ECB now flagging that its deposit rate could go below zero - effectively charging those who park cash - many of those remaining are fearing for their future.
Though funds do not park money at the ECB themselves, sub-zero rates would hurt because the yields on the government, corporate or bank bonds that make up the bulk of their portfolios are also be likely to become unprofitable.
"It could be the final nail in the coffin for money market funds," said Patrick Simeon a fund manager at money market giant Amundi in Paris....MORE
