The Road Ahead

Each year at this time we look ahead and identify challenges that we believe will define the landscape treasurers will face in the New Year. Not unlike the GPS tools that can identify traffic, weather and detours that may be encountered en route to one’s destination, our goal is to survey the road ahead to see what route changes may be necessary to safely arrive at one’s destination. The challenges for 2013 are somewhat of a continuation of the past year’s prevailing trends, but as these trends mature and evolve we anticipate they will have an increasingly greater impact on the treasurer’s world.

The catalysts behind the current trends are largely related to the regulatory reactions that sprang up following the ’08/’09 credit crisis. The high-level goals of the regulatory changes at that time were to “de-risk” the financial sector and to reduce or eliminate the prospect of government bailouts in the future. In 2013, we believe the medium- and long-term impact of regulatory initiatives on the finance sector will become clearer. For example, Dodd-Frank is in the midst of implementation, the Basel III banking regulations are being phased in and the TAG program is expiring. Some of these regulatory changes are causing industries to adjust their business models. In the banking industry, for example, institutions will be realigning their deposit bases and lending practices in order to remain in compliance with new regulations. The money market fund industry still faces potential regulatory changes. The end result for treasury professionals is that risk management is being pushed down to the investor level where implicit government support of deposits, banks and money market funds is not guaranteed. These changes will require investors to develop risk management tools that span across exposures and investment channels that they have not had to consider in the past. We welcome the New Year and will work to help the treasury community understand and meet its many challenges.

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Best Regards,

Ben Campbell
President & CEO