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Cracking the treasury vault – what’s in store for 2018?

Over the last years the global economy has been in a ‘Goldilocks’ state, enjoying moderate economic growth combined with low inflation and low interest rates. These favourable market conditions are fuelling corporate and private equity M&A activity, which is generally keeping treasurers busy around the globe. And although the consensus is that the Goldilocks economy will continue in 2018, it will be the unexpected events (rather than expected) which will drive the financial markets. In this regard who better to deal with the unexpected than the treasurer?

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Zanders IRRBB Quick Scan

In April 2016, the Basel Committee on Banking Supervision (BCBS) issued the final standard on Interest Rate Risk in the Banking Book (IRRBB). In this standard, which will be the basis for new EBA guidelines, the BCBS recognizes that IRRBB is best captured in Pillar II due to the heterogeneous nature of IRRBB among banks.

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Negative interest rates and embedded floors

In September 2016, we published the article ‘How Negative interest-rates will affect treasury’. We now delve into one of the problems mentioned concerning hedge effectiveness calculations.

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How negative interest rates will affect treasury

A few years ago it was deemed highly unlikely that euro interest rates would move below the perceived floor of zero. Nowadays, we encounter a sub-zero interest-rate environment that raises many challenges for a treasury department. In our opinion, the challenge of negative interest rates for treasurers can be considered as challenges for the treasury operations and challenges from an investment perspective.

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A Structured Approach towards a Best in Class Financial Risk Management Framework

The increased volatility in the commodity and foreign exchange markets, augmented counterparty risk and the low interest rate environment have led to an increased focus on financial risk management (FRM) for multinational corporations (MNCs).

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