Yesterday's Financial Times wrote "Clouds gather over money market funds". The article said, "Earlier this month the European Central Bank took the unprecedented step of slashing the interest rate on its deposit facility from 25 basis points to zero, alongside a cut in its headline interest rate. Until last week, when the cut was implemented, banks had been keen to borrow short-term, often overnight, cash from money market funds and earn a carry by depositing it with the ECB. But with this option no longer viable rates have plunged, with some banks now paying zero or negative yields for anything up to three-month money. This move will eat into the already pitiful yield ultra-conservative money market funds are currently generating; euro government funds boasted an average running net yield of just 2bp, even before the ECB announcement, according to iMoneyNet."

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