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In recent years, there had been a move towards the use of lower-rated and unrated money market and liquidity funds and even structured products as corporate treasurers have sought to increase yield. The assumption, regardless of the risk of a product, was that liquidity would always exist.
"Now liquidity has been proved not to be permanent and there is a reaction to the current market and a move towards bank and time deposits or, at the least, highly rated funds," says Phillip Lindow, head of global treasury and investment management, transaction banking, at ABN Amro in London. "Treasurers are focused on products that are perhaps more appropriate to short-term operating cash. The comment we have heard from many treasurers is that the main aim is to protect principal."
As treasurers have become more keenly focused on the need to preserve cash, the issue of cash mobility has become increasingly important. "If cash is trapped in any currency, it is not being used effectively," says Lindow.