Thirdly, while corporates find more business opportunities, they also face even more challenges which you, as corporate treasurers, are probably well familiar with. For example, increasing market risks, where corporates operating in multiple countries are faced with growing exposures to different currencies and rates. In fact, divergent monetary policies among key advanced economies have led to greater volatility in the global foreign exchange market. And, with the international use of the renminbi on the rise, the reform of the yuan’s exchange rate since August 2015 has also resulted in more two-way movements of the exchange rate against other currencies. These recent developments have created more market risks. 15. Lastly, global regulatory reforms have also had an impact on corporate treasury management. These reforms, particularly the higher capital and liquidity requirements under Basel III, have led to more constraints on global banks in providing funding and making a market for hedging tools for corporates. As such, there is an undesirable impact on corporate treasurers in terms of financing cost and asset and liability management. Benefits of CTCs 16. Corporates need smarter solutions to address these opportunities and challenges. There has been a greater call for corporates to set up more structured regional corporate treasury centres, CTCs in short.
Many market participants have considered CTCs useful for a number of reasons:  BIS central bankers’ speeches  3  •  one, through centralising treasury activities, CTCs help effectively translate management’s vision into firm-wide policies, such as preferences on operating currencies, hedging and day-to-day transactions;  •  two, CTCs help lower funding costs through the optimal use of intra-group funding and netting, as well as external financing; make more co-ordinated use of corporate balance sheets, and; enable corporates to more effectively tap capital markets for longer term funding;  •  three, they help optimise working capital positions and facilitate daily sales through customised transactional arrangements. And by concentrating excess liquidity in CTCs, senior management can achieve better visibility and control over their cash and reduce frauds; and  •  four, they act as corporate centres to consolidate various foreign exchange and interest rate exposures and allow centralised hedging on net positions. Therefore, corporates can eliminate redundant procedures to reduce associated costs and enhance efficiencies. 17. In addition, more and more corporates are adopting technologies, such as the “Enterprise Resource Planning” System and the “Treasury Management System”, which enable them to improve control over local subsidiaries’ activities and standardise treasury operations. All in all, CTCs can play the critical role of an inhouse bank within a multinational corporation and a function that multinationals should develop in tandem with their global expansion plans. Hong Kong as a preferred CTC location 18.