Treasury Today Country Profiles in association with Citi
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February 2009

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What’s in a number?

Even in the world of treasury, where large sums of money are a fundamental aspect of the job, the figures we have been seeing in the news in the past few weeks are staggering. The news continues to be dominated by stories such as the alleged $50 billion fraud run by Bernard Madoff and bank bailout packages with price tags like £200 billion, €500 billion and $800 billion.

The larger numbers are, the more abstract they become. While €10 represents a value that everyone can comfortably visualise and quantify on a personal level, fewer of us feel the same about €10m. By the time you reach $50 billion, the size of Madoff’s alleged Ponzi scheme, the number is dizzying and hard to comprehend.

The word ‘treasury’ once referred to a more physical collection of wealth. To the ancient Greeks, a treasury was a building designed to accommodate valuable gifts dedicated to the gods. Today, in the age of information, the numbers moving between banks are divorced from any physical manifestation and have become almost virtual. Under such conditions, it is easy to lose track of what these numbers mean and what consequences they might have if misused.

The separation of numbers and the idea of what they mean is a common theme voiced by rogue traders, such as Nick Leeson, who toppled Barings in 1995, and Jerome Kerviel who allegedly lost Société Générale €4.9 billion last year. Kerviel was recently quoted by French newspaper Le Parisien as saying, “Everything you do as a trader remains in the virtual world. It’s a little like playing a computer game. Losing or winning a few million: it only takes a few seconds.” Today, with all eyes on the financial world, the consequences of such vast numbers have become far more visible.

Yet with liquidity remaining scarce, treasurers are now finding themselves focusing on the smaller amounts of cash as well as large, reviewing processes and structures in order to squeeze every drop of excess cash out of the system. In many cases this will involve adopting a more creative approach than in the past. Crisis is often a catalyst for innovation, and whether you are dealing with large figures or small, at times like this it is more important than ever to streamline processes, build efficiencies and embrace best practice at all levels of the company. The numbers are, after all, real and not virtual.