What’s on International Treasurer’s radar screen this week.
With Dodd-Frank now signed into law, we join many in looking to shed light on its impact for treasurers. And, as we have noted, sorting out the impact will be a long-term project. Already, however, we have seen some unanticipated outcomes, like rating agencies being caught up on expert liability questions.
Also, in a recent Treasury Strategies webinar, consultants noted that banks are investigating what impact paying interest on corporate demand accounts (versus earnings credits to offset fees), which the new law makes possible with the repeal of Regulation Q, will have on their deposit business. This is another less-than-well publicized aspect of the reform law. And they are only the tip of the iceberg.
Bank stress
We will also be watching for the European bank stress test results to see what they say about specific corporate banks as counterparties, and what impact they will have on the European and world economic situation. We also explore any impact on the relative value of USD-EUR.
Related to bank stress tests and the regulatory environment, on the agenda for the upcoming NeuGroup meeting of the Global Cash and Banking Group is a look at how global banking franchises (with meeting sponsor Citi, being a prime example) are reexamining their lines of business in response to the evolving environment. Of particular interest will be how global cash and payment services will be impacted from a bank perspective. This agenda item complements the main focus of the meeting: discussion of the first phase outcomes from the group’s Principles for World-Class Cash Management Project.
Defining risk
On the topic of defining risk, we have already mentioned how the FASB is reported to be considering reopening the questions about the definition of risk eligible for hedge accounting where anticipated intercompany transactions are concerned. The principle behind this is that risks eligible for hedge accounting must be seen at the consolidated enterprise level.
A related question is being discussed in The NeuGroup’s Corporate ERM Group: Do company policies have formal definitions of risk, and are these definitions different for risks that show up at the business level versus those at the enterprise level?