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Tuesday, 23rd April 2024
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Treasurers can now reap rewards of euro preparation Back  
Sean Grace, chairman of the Irish Association of Corporate Treasurers looks forward to phase two of the EMU process.
The Irish Association of Corporate Treasurers (IACT) is now well established as the representative body for the corporate treasury profession in Ireland. By it’s nature the treasurer’s role has a significant external dimension and the Association’s membership of the International Group of Treasury Associations ensures that Irish practitioners are kept aware of and indeed can influence the development of treasury expertise and best practice in an international context. In the past the financial market in Ireland had its own particular attributes and even products - hands up those who remember the famous Irish ‘hedge’ contract which allowed the risk manager to prudently manage foreign exchange risks in a very strict exchange control environment. By the time you read this article the Irish financial market will have been consigned to history and even Irish interest rates will no longer independently exist.

We have now much more in common with our international colleagues. The closer integration of Europe is partly designed to remove the barriers of trade within the European Union, thereby reducing the cost of trading across the old borders. Similarly, the transformation of the individual national financial markets into one large market should and will reduce the cost of hedging, the cost of raising debt in ‘local’ currency, and the cost of transferring funds across borders, to name but a few.

In the past year the corporate treasurer has been closely involved in working with other departments in the company to ensure a smooth corporate transition to the euro. Indeed, in many instances the treasurer has initiated and led the euro project for the whole company. This is a prime example of where the treasurer can take an initiative on a major strategic issue for the company, ensure that senior management are aware of the business and financial issues, gather the necessary resources, and manage the project through to completion. It is this kind of experience that will allow the treasurer to broaden his scope within organisations, and raise the profile of the function.

The coming year will kick off phase two of the EMU process. This phase will involve ensuring the company reaps the full benefit of the financial resources that have been invested in making the company euro compliant. It will also allow the treasurer to build on the experience and knowledge of the business he has gleaned from the EMU process. The benefits of EMU need to be exploited to the full, in part to recover the cost of compliance and the threat to margins from greater competition and price transparency, but also to maintain and indeed improve competitiveness through reducing financial costs. One way of achieving this is to streamline and consolidate cash flows across Europe. In some countries the cost of cross border transactions are prohibitive, and value dating and correspondence banking problems take time and money to resolve. The single currency allows us divert funds away from those high cost regimes without having to suffer the potential of currency losses. The Association will endeavour in the coming year to spread the good news EMU story, to help the treasurer to add value to his organisation by exploiting the benefits of EMU.

The IACT Graduate Certificate in Corporate Treasury was launched this year in association with Dublin City University and has been very well supported by both the corporate and financial community. This has been the pivotal event in the development of the Association, when it was transformed from what some see as a well-intentioned club to a fully professional organisation. Over time it is expected and indeed hoped that the Association will become more populated by members who entered via the education route. The course is already gaining a reputation whereby hard work and high standards combine to ensure that the students come out the other end with a certificate of considerable value, together with a sense of personal pride and achievement. My primary aim as chairman is to ensure that the Certificate becomes well established, building on the success of the first year.

The Association will continue to serve the interests of its members through its tried and trusted methods, namely the quarterly journal InterACT, its annual conference, and members meetings in Dublin and throughout the country.

The Association as a network of members is, I believe, one of the least tangible but most important benefits that it brings to members. By its nature treasury business is innovative. Through the network of members a large pool of expertise and experience is available to help and advise on an informal basis. There are many opportunities to meet and establish contacts with other treasurers via the business activities of the Association and the social events throughout
the year.

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