One argument against reducing the interest rate on reserves to zero (as there were for decades before 2008,) is that this would cause problems for money market mutual funds.
What is the problem exactly?
Presumably it would involve banks buying money market instruments (short and safe bonds,) rather than hold reserve balances. This would tend to drive up the prices and lower the yields on those money market instruments. And then, the money market mutual funds would earn less on their asset portfolios.
So? Why can't money market mutual funds handle this situation?