Countries around the world are still struggling to reenergize their sluggish economies from the impact of the Global Financial Crisis (GFC) and the Eurozone Sovereign Debt Crisis. Implementation of quantitative easings; fiscal and monetary policies to revitalize the economies are now been hampered by low commodity prices, declining crude petroleum oil prices and the volatility in foreign exchange markets. The current economic scenario poses a variety of challenges to the treasury of banks around the globe.
-What treasury management strategies would you recommend for a sustainable banking operation in the light of the crises.(please ellaborate in full details)
Treasury management strategies would you recommend for a sustainable banking operation in the light of the crises
Answer
We can mention the following strategies for sustainable banking operation
After viewing the causes and impacts of both crises, deficiencies in the management and supervision system by of bank treasuries can visibly be detected.
Recommendation
The first recommendation of treasury management strategy is to improve the risk management strategy. It is to be done by evaluating risks more carefully and implementing vigilant and watchful assessment of risk management. Needless to say, banks should be checked by governmental institution once predefined time period, or perhaps submit report on its progress in terms of managing risk with the further disclosure of risk levels.
In the presence of the crises, it is safe to say that proprietary information is a vital asset for financial institutions. The lack of transparency and quality of information of banks’ accounting caused borrowers to make bad decisions and increase debt levels, which transmitted damaging outcomes throughout the financial system. Thus, detailed risk disclosures should be implemented so that borrowers and depositors are prudent.
However, that alone is not the perfect solution for treasuries. The remedy should include improved corporate governance at the institutional level as well. Banks have a central role in economies and governments, and treasuries should introduce regulation that allowssustainable development that does not restrict the efficient functioning of financial markets
