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Industry roundup: 4 January

Near-zero interest rates causing treasurers to look at alternative short-term instruments

With the Federal Reserve expecting to keep its benchmark short-term interest rate near zero through at least 2023, some treasury investment managers are looking at higher-yielding short-term investments options in the money markets, says ICD, an independent portal provider of money market funds and other short-term investments.

In a recent ICD webinar, 'Short Term Investment Options in a Low-Rate Environment', 71% of treasury professionals polled said they are planning on investing in or are currently investing in new money market instruments. Some 46% said liquidity remained their top priority.

“In the current environment, it’s not surprising that liquidity remains a top priority for treasury organisations," said Sebastian Ramos, EVP of Global Trading and Products at ICD. "However, we are finding that - especially for non-operating cash - investors are still looking to pick up some yield with alternative investment options that go out a little farther on the curve, particularly where there is still some inherent liquidity in the product.”

Meeting the demand for alternative investments, ICD has worked with its fund partners to add new products to its ICD Portal, a one-to-many model for treasury organisations to independently research, trade, analyse and report on money market funds and short-term instruments, all in one place.

During the webinar, Ramos provided an overview of the investment options available on ICD Portal, including:

  • Money market funds.
  • Short duration bond funds.
  • ESG and socially responsible funds.
  • FICA.
  • Demand deposits.
  • Time deposits.
  • Separately managed accounts.

 

RMB overtakes Canadian dollar in global payments currency table

The latest results from SWIFT's RMB Tracker show that, in November 2020, the RMB has climbed one position to the fifth most active currency for global payments by value, with a share of 2.00%. Overall, RMB payments value increased by 19.80% compared to October 2020, while in general all payments currencies decreased by 0.63%. In terms of international payments excluding payments within the Eurozone, the RMB ranked 7th with a share of 1.26% in November 2020. 

As a global currency in trade finance market, based on the value of live and delivered MT 400 and MT 700 messages exchanged on SWIFT, the RMB was the third most active currency in November 2020, with a 1.81% share. It only trailed the euro (6.45%) and the US dollar (86.39%), and overtook the Japanese yen (1.79%). 

The top economies for FX spot transactions in RMB in November 2020 were:

  • UK: 40.37%
  • US: 15.58%
  • China: 12.70%
  • Hong Kong: 7.81%
  • France: 6.95%

This is based on the value of FX confirmations, including central banks, inter-group only, looking at MT 300 messages exchanged on SWIFT.

 

UK SMEs remain committed to sustainability despite Covid-19

The majority of UK SMEs remain focused on improving their environmental sustainability despite Covid-19, according to Lloyds Bank Commercial Banking’s Business Barometer. More than half (54%) of UK SMEs said becoming more environmentally sustainable is important to their business - just ten points fewer than the proportion that said the same in 2019 (64%).

Despite the challenges of the last year and the disruption caused by the coronavirus pandemic, more than half (52%) of UK SMEs continued to work to become more environmentally sustainable in the past 12 months - just 11 points fewer than in 2019 (63%).

A fifth said they had used suppliers that source environmentally friendly products and services (19%) or made alterations to their premises to improve energy efficiency (19%) in the last year.

A similar proportion (17%) have invested in energy efficient equipment or machinery, while one in ten (11%) has switched energy supplier or installed an onsite renewable energy source.

When it comes to SMEs’ sustainability drivers, pressure from customers (18% vs. 22% in 2019), long-term costs savings (18% vs. 23% in 2019) and firms’ corporate social responsibility policies (17% vs. 19% in 2019) are the top three factors.

Meanwhile, cash reserves (29% vs. 35% in 2019) and government grants (13% vs. 12% in 2019) remain the most popular forms of finance for SMEs looking to improve their environmental performance.

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