Unlocking Trapped Cash in a Fragmented Landscape

Standard Chartered leaders offer a four-step playbook to help treasurers develop strategies to cope with regulatory, structural, and operational challenges surrounding liquidity.

Geopolitical shifts are reshaping the financial corridors that corporate treasury depends on. Regulatory frameworks that were once converging are now pulling in different directions. In this environment, trapped cash is a more consequential challenge than before. When liquidity cannot move, the business cannot act. Corporate treasurers often ask: “How can we manage liquidity across multiple markets and currencies?” The reality remains that many organisations end up relying on external funding at higher cost even when sufficient liquidity exists within the group.

From constraint to fragmentation

Trapped cash arises from a familiar set of constraints: currency restrictions, legal entity structures, tax frameworks, transfer pricing arrangements, and fragmented banking relationships. Many treasury structures were designed for earlier conditions and have evolved incrementally, often to optimise resources and accelerate time to market, rather than through deliberate redesign. The cumulative result is a system that increasingly struggles to keep pace with how the business operates.

A more useful way to frame this challenge is fragmentation – liquidity that is visible but not always usable in practice. The issue is not the existence of constraints, but how they interact. A currency that cannot be converted may sit within a legal entity that cannot lend to group headquarters, be held with a banking partner that lacks the clearing capability to move it efficiently across the required currency corridor or payment system and be subject to tax leakage if accessed externally. The result is a structurally more complex problem, in which the number of interactions between constraints grows faster than the number of constraints themselves.

Mahesh Kini, Global Head of Cash Management, Standard Chartered, stresses: “Fragmentation makes effective liquidity mobilisation a strategic priority.”

Where complexity becomes real – the regional nuance

This interaction becomes most visible when liquidity needs to move across regions, where regulatory, currency, and market dynamics differ significantly.

Nowhere is this more evident than in Asia. China, India, and several Southeast Asian markets continue to present some of the most complex liquidity management environments for multinational organisations, combining significant liquidity pools with regulatory and operational barriers that can make cross-border mobilisation challenging.

A treasurer may hold significant surplus RMB onshore in China while a regional subsidiary in Vietnam needs funding for a planned capital programme. Mobilising that liquidity may require a combination of cross-border lending frameworks, regulatory registrations, and hedging arrangements that together can take weeks to execute – by which point the group may have already drawn on external funding to bridge the gap.

Similarly, cross-border INR flows remain subject to regulatory oversight and capital controls, creating additional considerations for organisations seeking to move liquidity across borders.

Within Southeast Asia, there is no unified regional framework, and what works in Singapore does not automatically extend to Malaysia, Thailand, Indonesia, Vietnam, or the Philippines. For example, a notional pooling structure operated from Singapore currently cannot include Indonesian rupiah balances directly as onshore IDR balances cannot participate in cross-border offshore pooling structures.

Yet regulators across China, India, and parts of Southeast Asia are gradually opening pathways for more sophisticated liquidity structures. This is creating new opportunities for multinational organisations to implement cross-border pooling and centralised treasury models that were previously difficult to execute.

The picture is different in North Asia. Japan is more open to cross-border liquidity flows, with relatively few restrictions on intercompany lending, currency conversion, or repatriation. South Korea also supports cross-border liquidity management but imposes more structured reporting and registration requirements for certain funding arrangements. In both markets, documentation and reporting requirements can materially affect execution timelines.

The picture spanning the Americas

Across North America, the challenge is often less about regulatory barriers and more about organisational complexity. Capital generally moves more freely across the region than in many parts of Asia, placing greater emphasis on treasury structure and execution than regulatory constraint. Large multinational groups have expanded through decades of geographic growth, acquisitions, and organisational change, creating treasury models that span multiple legal entities, banking relationships and funding arrangements.

While many of these structures were designed to optimise liquidity under earlier tax and regulatory frameworks, some have persisted long after the original rationale has diminished. Where integration is incomplete, liquidity can remain dispersed across entities, accounts and structures that no longer align with the organisation’s current treasury objectives. The result is that liquidity may be visible at a group level, but materially harder to mobilise when and where it is needed. For South America, currency and regulatory restrictions continue to act as a bottleneck for liquidity concentration.

Special structures for the Middle East

In the Middle East, liquidity management often requires organisations to navigate both conventional and Islamic banking frameworks. While netting arrangements are gaining better traction across Gulf Cooperation Council (GCC) markets, conventional notional pooling remains highly restricted, as country-specific regulations vary significantly. Organisations or local affiliates operating on Shariah-compliant principles cannot rely on standard interest-based pooling. Instead, they require parallel, Shariah-compliant arrangements with their own documentation, governance and execution path.

In some markets, including Kuwait, notional pooling is not market practice regardless of structure. Standard Chartered’s long-standing presence in both conventional and Islamic banking markets provides organisations with access to structures tailored to local regulatory and Shariah requirements.

Europe’s post-Brexit landscape

Across Europe, liquidity management is often assumed to operate within an integrated financial environment, but differences in regulatory interpretation, tax treatment, and market practices continue to introduce friction.

Post-Brexit UK-EU flows that were once operationally straightforward now operate in a more complex regulatory environment, requiring reassessment of account structures, payment routing and cross-border data, and compliance requirements. What appears seamless at a structural level can still prove constrained in execution. Emerging regulatory developments, including Article 21c of the EU Capital Requirement Directive, are also prompting many organisations to reassess treasury and intra-group funding structures, particularly where global liquidity models rely on non-EU banking entities.

Liquidity strategies that work in one market do not translate cleanly into another. Fragmentation is as much geographic as it is structural. Connecting liquidity across these environments requires the ability to bridge regulatory, currency and operational gaps, and to execute across the clearing corridors and currency pairs that multinationals rely on.

Having a trusted banking partner – such as Standard Chartered – that operates across multiple markets where these frictions are most acute, with the local knowledge, clearing access, and global structures needed to move liquidity across them, is critical in navigating the fragmentation.

A playbook for treasurers

Addressing fragmented liquidity requires focus: knowing which regulatory, structural, and operational issues matter most, then prioritising interventions that deliver the greatest impact.

1. Diagnose the constraint

The starting point is mapping liquidity to its underlying causes: not just where balances sit, but why they cannot move. This means assessing positions across regulatory barriers, tax implications, entity structure, market practices, and the capabilities of banking and clearing partners. This typically reveals that a meaningful portion of apparently trapped cash is operationally constrained, not structurally immovable.

Balances may sit in the wrong entity for historical tax reasons but can be moved through an existing intercompany loan structure that has never been activated. Surplus currency may be held in accounts outside the group’s pooling or interest optimisation structure, bypassing preferential terms already negotiated with the bank. Account structures may include redundant local accounts that could be consolidated within a single reporting cycle. At times, cash that was put up as collateral due to credit constraints can be freed up using alternative funding mechanisms if financial conditions have improved.

2. Define and prioritise the liquidity agenda

Not all constraints require immediate resolution. Initiatives must align with broader business priorities: improving forecasting, strengthening control over intercompany flows, reducing reliance on external funding or enabling faster capital deployment.

This involves distinguishing between three problems: a structural constraint might be a legal entity hierarchy that routes liquidity inefficiently and requires reorganisation over many months; an operational inefficiency might be a footprint of bank accounts larger than the business needs, such as legacy accounts retained after market exits or entity restructuring, which can be rationalised within weeks; and an economic trade-off might be whether to hedge a structural FX exposure now or wait for more favourable market conditions.

In practice, starting with operational inefficiencies unlocks meaningful liquidity within a single reporting cycle, building the mandate to pursue the structural work that takes longer.

3. Align structure and execution across markets

A liquidity model is only as effective as its executability. This means adapting structures to local realities, capturing regional efficiencies where available, and ensuring banking and clearing capabilities support the flows required.

An account management structure powered through sub-accounts or virtual account ledgers that consolidates receivables across multiple entities in a single market can reduce account complexity and improve visibility within weeks, without any change to the underlying entity structure.

Regional cash concentration arrangements can move liquidity into a treasury hub where it can be deployed more flexibly than if spread across subsidiary accounts. Payments- and receipts-on-behalf-of arrangements can further reduce account proliferation by routing flows through a single IHB entity, particularly where local entities operate in markets with limited cross-border functionality. Working with partners that operate across markets and clearing systems – such as Standard Chartered’s Payments and Treasury Solutions team – can help treasurers design solutions that work in practice.

As Ankur Kanwar, Global Head of Payments and Treasury Solutions and Head of Transaction Banking Singapore & ASEAN, Standard Chartered, points out: “A liquidity structure is only as effective as its executability.”

4. Operationalise and continuously optimise

Structural change is only the starting point. Treasurers need real-time visibility of balances, commitments, liquidity forecasts, and intercompany positions, and the ability to see and deploy available liquidity under real constraints. This visibility helps determine when internal liquidity can be mobilised and when external funding is required.

Platforms such as Straight2Bank Liquidity offer enhanced visibility that enable treasurers to act on real-time liquidity positions as conditions change – redirecting a surplus position to cover a short position in another market before it triggers a funding requirement.

Liquidity and FX should also be treated as a single, interconnected problem. Structures that combine pooling with embedded FX capabilities – for example, through integrated solutions such as Standard Chartered’s PrismFX – enable organisations to manage liquidity and currency exposure within a unified framework at pre-negotiated terms, eliminating the spread cost of converting through multiple independent transactions.

Interest optimisation structures can further improve outcomes by ensuring balances that cannot be pooled immediately, whether for regulatory, operational, or timing reasons, continue to earn competitive returns while remaining available for future deployment.

Together, these steps shift treasury from reacting to constraints toward actively shaping how liquidity moves.

Liquidity as a designed capability

The defining challenge for treasury has shifted. Visibility and control remain necessary, but the harder question is how liquidity behaves across multiple interacting constraints.

Rule-based structures such as automated sweeping, target balancing, and notional pooling were designed for predefined scenarios and are increasingly difficult to sustain in a landscape where conditions shift continuously. Liquidity must instead be treated as a capability that is deliberately structured, continuously refined and able to scale as the organisation evolves.

Real-time APIs already enable treasurers to move from end-of-day reporting to intraday action, while AI-driven forecasting is narrowing the gap between expected and actual cash positions.

Execution platforms are combining liquidity, FX and funding decisions that were previously managed separately, while emerging digital settlement mechanisms, including tokenised deposits and stablecoins, may further expand the range of options available to treasury teams, although adoption remains at an early stage for most treasury organisations.

The direction of travel is clear: from rule-based responses towards systems that interpret intent and navigate interacting constraints in near real time.

Against the backdrop of a fragmented financial landscape, liquidity advantage is not determined by how much cash is held, but by how effectively it can be mobilised across constraints that were never designed to work together.

Sandrine Jourdainne, Global Head of Deposits and Liquidity Management, Standard Chartered, concludes: “In a fragmented landscape, timely access to liquidity can still be achieved through meticulous design.”