Risk and Reward: Making Your Cash Work Harder

Risk and Reward: Making Your Cash Work Harder

by Ben Poole, Editorial Consultant, Ben Poole Editorial Services

During the Cash Management University programme organised by BNP Paribas smaller workshop sessions allowed delegates the chance to interact with their treasury peers and representatives from BNP Paribas and other vendors. One such session focused on short-term investment options for treasurers.

Market conditions

The theme of the workshop was how treasurers can make their cash work harder for the business in a time when the economic situation remains challenging and risk management figures highly on the treasury agenda. Proceedings began with a presentation from BNP Paribas Investment Partners that focused on the current market conditions and how treasurers are responding to them.

One of the main problems faced by treasurers in the short-term investment area is that interest rates are very low. Low rates are not just a euro phenomenon and have been seen in a number of global currencies over the past few years. Perhaps the one thing that differs in the past six months is that, while there has been little variation in the Fed fund rate or the Bank of England rates, there has been a move by the Eurozone. Here, the 30-day average rate has dipped from around 0.35% in July 2012 to below 0.1% by November 2012. This is the result of an attempt by the ECB to protect purchasing power and therefore price stability in the Eurozone. On top of the low rates, short-term credit spreads are tight, even expensive.

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