Treasury Today Country Profiles in association with Citi
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January 2009

Previous editions

Editorial

Facing the future

In times of crisis it is only natural to focus on the past. How did we get into this situation and why? When was the last time anything like this occurred? What were the consequences and how long did it take for the situation to recover?

The past gives us a benchmark against which we can measure the scale of the problems we are facing today. The longer ago the event we are referencing, the worse the problem must be. UK interest rates were recently cut to the lowest level since 1951 while the ECB announced its steepest rate cut in 10 years of existence.

Meanwhile, many are claiming that the current global downturn is the worst since the Great Depression. With this in mind, we have seen some governments moving to adopt the short-term spending strategy advocated by twentieth century economist John Maynard Keynes, who once famously said, “In the long run, we are all dead.”

Nevertheless, the future is on its way here, and in 2009 it will be interesting to see whether other projects that have been overshadowed to a certain extent by the banking crisis are able to move forward on schedule.

We have already seen Slovakia’s adoption of the euro on 1st January and the European payments landscape is set to continue its evolution this year with the implementation of the Payment Services Directive in November. The launch of the SEPA Direct Debit is also currently scheduled for November and debate is ongoing as to whether this deadline will be met.

The world keeps turning for corporate treasury and at some point the liquidity crisis must be viewed not as exceptional circumstances but as normal life – a reality that is here to stay, at least for the time being. As the new year begins, many will therefore be taking a moment to reflect on the events of recent months and to consider if and how they will need to adapt their own practices and strategies to the new world order going forward.