Back in the summer of 2014, when the ECB first unveiled NIRP, many were concerned that this submersion into the monetary policy twilight zone would first crush Europe's money markets. However, at least until now, European MM funds have proven relatively resilient,

The story in Japan is different.

When the Bank of Japan announced they were instituting NIRP back in January, they intended to spur lending and push inflation up. As often is the case with central planners, their academic theory was much different than the economic reality.

Money market has fallen off a cliff in Japan, and the freeze in short-term credit markets can be solely attributed to the BOJ's negative interest rate policy. So far, in a contrast to the financial crisis, activity is frozen simply because brokers are having a hard time pricing and processing transactions as opposed to concern over counterparty risk (for now). Firms have capital to sustain this short-term freeze at the moment, but the break in this market is certainly something to keep a close eye on.

This sums up the sentiment in Japan: "Among central banks, the BOJ is the one that destroys functioning markets the most," Izuru Kato, the president of Totan Research in Tokyo was quoted by Bloomberg.

"Companies will slash staff and scale back operations where activity is grinding to a halt, exposing markets to spikes in rates when the time comes for normalization."

What normalization?

As Bloomberg shows, the interbank call market hit a record low at the end of March.