Co-developed with Deutsche Bank’s Global Head of Structured Liquidity Products, Lisa Rossi, the Checklist on ‘Achieving full global visibility and understanding of your cash’ takes the corporate treasury department through the key questions to be answered, the issues to be considered and the main actions required to have full visibility and understanding of their cash globally.
Understanding cash characteristics and tenor
In today’s environment where increasing financial regulation is changing the way banks conduct their business, corporates need more than visibility of their cash positions. They also need to understand the characteristics and tenor of their cash. The capital requirements from Basel III, Bank of England’s Capital Requirements Directive IV, and stress testing are requiring banks to value liabilities differently than in the past, when regulators considered all deposits to be identical.
Today deposits that are temporary or transitory are not as valuable as deposits that have duration or a term component. This requires corporate treasurers who have comfortably left balances in current accounts to now consider the true value of cash more carefully. And this will become even more important if the financial institutions, as some have suggested, start charging for large overnight current account balances that absorb too much of their balance sheets.
Corporate treasurers will be required to become far more proactive in their management of operating and reserve balances. They will not only need to have full visibility of their cash in the financial system, but also to become better at understanding and predicting its duration. This could include rationalising their banks to ensure that all the banks in their cash management processes and pools are able to report full balance and transaction data in full and on time, full visibility and understanding of your cash is now vital.
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