As a central banker I feel some empathy with those who find themselves sandwiched between pressure on one side from their masters to achieve ever lower funding costs or ever better returns from financial investments, and persistent enticements on the other side from bankers claiming that you could be freed of all that pressure if you simply subcontracted everything into their capable hands. Treasury has come to be regarded in many instances as a separate profit centre. The treasurers of some major corporates are nowadays acknowledged as being at least as significant players in the financial markets as are the banks themselves. There are some well-known examples where the profitability of an enterprise in the manufacturing or services sector has been sustained by deft treasury and financial management for considerable periods when the mainstream business has itself been floundering. And there are also examples, alas, where reputable companies have been brought to their knees by flawed financial management. You probably don’t have an easy life, but you won’t need me to tell you that. I find myself wondering whether or for how long the financial scene will continue to be one of such rapid change as we have been witnessing in recent years; and what the implications are, for any or all of us here, of recent and prospective developments in financial products and infrastructure.
As history bears witness, such strategies are as good, but only as good, as the assumptions that are programmed in, be they about economic forecasts, covariances between various events, or whatever. But even if we felt that these particular strategies were foolproof, there are a myriad of other financial transactions which can only really be consummated by a conscious human decision. The home buyer faced with a choice between taking a mortgage from bank A or bank B is unlikely to have a sophisticated and reliable mathematical model with which to compare the offers and determine conclusively his choice. But the culture nowadays, bred at least in part by the technological feasibilities of the IT era, is one which is likely to place the home buyer under much greater pressure to reach a quick decision than his parents would have been a generation ago, or even his brother five years ago, for fear of losing the best offer - if only he could assess which was the best. There is less time to reflect; less time to seek out disinterested advice. There are of course some areas of finance which appear relatively untouched as yet by this revolution. In the realm of corporate finance, in every jurisdiction so far as I am aware, the documents seeking shareholder support for a merger, for example, are still required to be sent by post, and with a reasonable minimum notice period for response.