Treasury Management Roles

Despite some short-term relief from month-end rebalancing, we believe that government bond yields face upward pressure over the medium term from a supply/demand perspective. There are two duration shifts that present a headwind for government bonds over the medium term. The first duration shift has been taking place in demand and has to do with the retail impulse into bonds. The YTD pace in bond funds is tracking pace of around $450bn-$500bn, a sharp decline from the $1.36tr seen in 2024. The picture looks even more problematic for bond demand if one takes into account the duration impulse. Not only have bond fund inflows slowed sharply this year relative to 2024 but these inflows have shifted away from longer duration government or corporate bond funds towards short duration funds. In other words, there has been an even bigger decline in bond fund demand in duration terms. The second duration shift has been taking place in supply. While the duration impulse of corporate bond issuance has been flattening out as corporates reduced sharply the maturity of their issuance, the duration impulse of government bond issuance continues to rise widening its gap with corporate bond issuance. This is shown in the chart below which depicts the notional amounts of USD corporate bonds in 10y-equivalent terms along with the equivalent metric for the Treasury excluding Fed holdings. In other words, much of the duration supply has been stemming from government bonds rather than corporate bonds.

Highly-rated sovereign #bonds with short maturities face the lowest demand elasticities from #investment funds, suggesting their role as safe assets. •US Treasuries appear to act as a global safe asset, as bonds issued by most regions other than the euro area are significantly affected by portfolio rebalancing towards US Treasuries following a shock to US T-bill returns. •German Bunds exhibit characteristics of a regional safe asset, with substitution patterns primarily within a narrow set of euro area safe government bonds. The Bank for International Settlements – BIS report analyzes a detailed dataset of global bond holdings by #mutualfunds in the US and euro area to estimate demand elasticities for various bonds. The study uncovers that US Treasuries act as a global safe asset, with their return changes prompting broad adjustments across risky and emerging market bonds, whereas German Bunds function more regionally, primarily influencing euro area safe government bonds. These findings highlight segmentation in international bond markets and have implications for monetary policy transmission, particularly during times of financial stress.

Over the past 12 months, I’ve helped 50+ CFOs optimize their treasury function. I’ve also enjoyed conversations with hundreds more finance leaders and treasurers who are trying to troubleshoot cash flow management and visibility issues. In that time, I’ve identified 5 common problems that keep most of these companies from running a more strategic treasury team. I call these the Cash Control 5 (because naming things helps). Solve these, and you unlock real operational efficiency and strategic financial gains. PROBLEM 1: Manual Processes Still Dominate Treasury Too many finance teams ➜ still stuck in Excel workflows for reporting, reconciliation, and forecasting. This consumes hours of work and increases the risk of human error - 2 things you don’t want. PROBLEM 2: Fragmented Cash Visibility Many bank accounts, currencies, and regions ➜ Low visibility into cash positions. This fragmentation creates blind spots that make decision-making slower and less reliable. PROBLEM 3: Inaccurate and Time-Consuming Cash Forecasting No proper tools ➜ manual / reactive top-down cash forecasting. Very limited granularity and visibility. Without an accurate, real-time view of cash flow, forecasting takes a LONG time. By the time the data travels up the chain of command, the data is often stale, making real-time decisions almost impossible. PROBLEM 4: Missed Opportunities for Cash Optimization Idle cash and inefficient working capital strategies ➜ missed opportunities. Whether it's optimizing investments or reducing costs, companies move too slowly because of poor visibility and limited insight into how to best allocate their cash resources. PROBLEM 5: Fear of Complex, IT-Heavy Implementations Many finance teams hesitate to adopt new systems, fearing the lengthy, resource-intensive implementation process. But modern solutions are faster and simpler to implement than most teams expect, often requiring little to no IT involvement. TLDR: 1) Manual processes → Slow down operations and increase errors 2) Fragmented cash visibility → Increase blind spots and slow decision-making 3) Reactive forecasting → Result in missed opportunities to optimize cash flow 4) Idle cash → Cost you money by sitting unused instead of used efficiently 5) Fear of complex implementations → Delay improvements that could free up resources and drive strategy Fix these 5 things, and your finance team can focus on what really matters: driving the business forward.

A new report by the Center for Sustainable Development at the The Brookings Institution looks at the rise of stablecoins and their implications for Treasury markets. ⏳ TL;DR #Stablecoins have become a material force in global finance as their rapid adoption is now shaping demand for short term US Treasuries. USDC and USDT now account for more than 90 percent of dollar backed stablecoins and hold roughly US 100 bn in T bills, which is comparable to major sovereign holders. Their reserves consist largely of short-dated bills and repos which anchors global cross border #payment activity directly to the front end of the US yield curve and places stablecoin issuers among the top foreign buyers of Treasuries over the past year. This creates meaningful #fiscal and financial spillovers since sustained inflows can lower US borrowing costs while sharp outflows have been shown to place two to three times more upward pressure on #yields and could transmit market stress across jurisdictions that already rely heavily on stablecoins for remittances and #inflation protection. Their expansion has occurred in parallel with rising global use of dollar stablecoins in remittance corridors and high inflation economies. Empirical evidence shows that cross-border stablecoin flows are significant across every major region and that adoption correlates strongly with currency depreciation pressures and financial frictions. The fiscal and macro financial implications of this are substantial. Stablecoins broaden the investor base for US government #debt and can reduce average #interest costs when demand concentrates in the front end of the curve. Model simulations indicate that a reasonable combination of global dollar circulation growth and stablecoin penetration could translate into two trillion dollars of Treasury demand by 2030. Concentrated issuance, episodic de pegs, limited redemption channels, and inconsistent global regulation introduce real risks for #market functioning and for emerging markets that may face currency substitution. 💭 Looking ahead A deeper reading of this trajectory suggests that stablecoins are not only reshaping micro level payment behaviour but are steadily repositioning themselves within the architecture of global macroeconomic power. Their growing role in financing the short end of the US sovereign curve signals a shift in how safe asset demand is intermediated and hints at a future in which private digital issuers sit alongside states, sovereign funds, and banks as core participants in international #capitalmarkets. If adoption continues at its current pace, the political economy of #dollar distribution will increasingly run through programmable instruments that respond to market incentives in real time. And that in turn could alter how #liquidity shocks, risk premiums, and cross border capital adjustments propagate through the system.

Digital Assets, Stablecoins & the Ripple–GTreasury Deal: What Treasurers Need to Know Digital assets are no longer a niche topic. Stablecoin circulation has grown from $2B in 2019 to over $208B in Q1 2025, and analysts project $2.8T by 2028. And with Ripple’s $1B acquisition of GTreasury, digital money and corporate treasury infrastructure are officially converging. So what does this mean for treasury? Treasury pain points are pushing treasurers toward new rails Most treasury teams still struggle with: • Slow, expensive cross-border payments • Manual reconciliation • Forecasting inaccuracy • Poor payment transparency • Fraud vulnerability along long correspondent chains Traditional rails weren’t designed for 24/7 liquidity or real-time visibility but digital assets are. Stablecoins are already being used at scale In 2024, stablecoin transfer volumes hit $27.6 trillion - surpassing Visa and Mastercard combined. This isn’t crypto speculation. It’s about faster settlement, richer data, and lower cost-to-operate. Blockchain architecture fits core treasury needs - Treasury needs trust, traceability, and speed. Blockchain provides all three: Decentralized ledger - no single point of failure Immutable audit trail - transactions can’t be altered Smart contracts - programmable settlement, automated escrow, built-in controls For treasurers, that means instant settlement, real-time reconciliation, and 24/7 liquidity access. Stablecoins vs. traditional currency - not a replacement, but an evolution Emerging regulations (GENIUS Act, MiCA, MAS, FCA, FSB) require stablecoin issuers to: • Hold 1:1 liquid reserves • Segregate customer assets • Guarantee par-value redemption • Avoid paying interest • Provide transparent reporting This regulatory clarity is precisely why adoption is accelerating. The Ripple–GTreasury acquisition: Ripple brings global blockchain rails. GTreasury brings 30 years of treasury workflows and controls. This is the first major sign that digital asset rails are being industrialized for enterprise treasury. What should treasurers do next? 1. Identify pilot opportunities Start small: cross-border supplier payments, intra-group transfers, digital bonds, or tokenized deposits. 2. Evaluate vendors & partners Assess: • Regulatory adherence • Custody model • ERP/TMS integration • Interoperability • Liquidity options 3. Strengthen governance & controls Define policies for: • Key management • Segregation of duties • Data transparency • Counterparty and issuer risk 4. Engage with regulators & industry groups Join working groups to stay aligned with US Genius Act, MiCA, FCA, SEC, FSB, and MAS requirements. So, the question is no longer “Will digital assets impact corporate treasury?” It’s “How fast will treasurers adapt and how will they use these tools to unlock efficiency, liquidity, and innovation?”

🔍 A Practitioner’s Perspective - The Future of Treasury 🔎 I had the pleasure of reconnecting with Clint Hong, a seasoned treasury leader with over 20 years of experience managing global liquidity, FX risk, and cash forecasting. Our conversation highlighted the transformation of treasury from a transactional function to a strategic powerhouse, as CFOs increasingly rely on treasury teams for forecasting and working capital insights. Some key takeaways: 🔹 Cash flow forecasting remains a challenge, especially in volatile markets. 🔹 Manual inefficiencies - like Excel-based cash positioning and bank account management - still plague treasury teams. 🔹 AI and automation are set to revolutionize forecasting, collections, and FX risk management. 🔹 Treasury professionals must stay engaged with industry trends and peers to future-proof their roles. As technology reshapes the treasury, the shift towards predictive analytics and automation is inevitable. What challenges are you seeing in treasury today? #Finmo #TreasuryManagement #Fintech #AI #FinanceInnovation #CashManagement #CashForecasting #FXRiskManagement #FinanceAutomation

Examining Treasury auction metrics across the curve reveals no signs of weakness in demand for US Treasuries at present. Bid-to-cover ratios are stable, and there is no evidence of auctions systematically tailing. This, however, offers little comfort when considering the rising trend in debt-to-GDP, the increasing term premium, the falling dollar, and the $9 trillion that the US government needs to refinance over the next 12 months. In particular, debt-servicing costs are rising rapidly, and the US government currently pays a record-high $3.3 billion in interest payments every day, and for every dollar the US government collects in tax revenue, about 20 cents go to paying interest on debt. With debt levels growing much faster than GDP, the bottom line is that Treasury issuance will continue to grow faster than the economy, and the most likely outcome is that investors will demand compensation in the form of higher long-term interest rates. In sum, there is upside pressure on short rates from higher oil prices, higher tariffs, and restrictions on immigration, and there is upside pressure on long rates because of fiscal challenges. This is obviously very important for investors in both public and private markets.

(Bloomberg) -- The government has issued an eye-watering $1 trillion in Treasury bills since the debt-ceiling was suspended in early June. So far, the market hasn’t batted an eye. For all the concerns about whether the market would be able to take up the supply, investors faced with uncertainty over the economy and the Federal Reserve’s policy path have piled into short-term debt, earning more than 5% yield to mop up the issuance. Further evidence of a market awash in cash is the relative stability in the Fed’s overnight reverse repo facility. Despite the deluge of issuance, the difference between bill yields and so-called overnight index swaps, which investors use as a proxy for the Fed’s path, is hovering just above zero and discouraging investors from pulling cash out of the overnight facility (RRP). Money-market mutual funds — the largest buyers of T-bills and the primary RRP counterparties — continue to stash more than $1.8 trillion at the central bank, though that’s down from $2.16 trillion at the beginning of June. “Supply seems to have been digested in orderly fashion as far as I can tell,” said Zachary Griffiths, senior fixed-income strategist at CreditSights. “We had been saying that the huge wave of bill supply wasn’t going to be a big issue for the market broadly because there is so much cash in the front end ready to be deployed if yields rose much more than ON RRP.” Still, the question will be how easily market participants will digest the next wave of issuance, which JPMorgan Chase & Co. strategists estimated to be about $600 billion between now and the end of the calendar year. Money funds still have significant capacity to take on more Treasury bill supply, they said. The weighted-average maturity of money-market funds is around 25 days and institutions tend to add duration when the Fed is getting close to cutting interest rates. There’s little evidence of a shift there. And with T-bills making up just 25% of government money fund portfolios at the end of July allocations remain low, there’s room to expand holdings and tap RRP funds where allocations are more than 30%, according to Crane data. And, even if the additional bill issuance proves hard to digest later this year, the resulting in higher rates on bill yields will incentivize money funds to remove cash from the reverse repo facility where there’s still plenty of cash.

I am excited to share the full survey report for my Managing Cash and Risk in my World of Global Economic Uncertainty survey. The objectives of this survey were to benchmark how companies are dealing with and (expect to deal with) never seen business dynamics in 2025 that are outside of normal planning scenarios. Five key themes, inferences and implications: 1. Cash management silos are prevalent at companies across industries and exist at companies of all sizes. 2. Treasury teams would do well to invest in taking more control and/or having more influence on accounts payable, accounts receivable, and treasury technology selection and management. 3. Companies are facing increasing supplier costs, changing supply change strategies, engaging alternative suppliers (often in countries in which they have previously had no suppliers), experiencing a need for more working capital of financing, and determining new approaches to managing risk in response to unexpected business conditions in 2025. 4. Companies are seeing unexpected increases in DPO and DSO relative to expectations going into 2025. 5. Companies are investing in technology, treasury staff and consultants to navigate unexpected and unpredictable market dynamics in 2025 that will show no signs of subsiding the rest of 2025.