CHICAGO, IL -- (Marketwired) -- 07/02/13 -- The U.K. Office of National Statistics (ONS), following the lead of the U.S. Federal Reserve, sharply lowered its estimate of cash held by non-financial corporations. Citing only "methodological improvements," ONS revised its estimate of year-end corporate cash downward by 31%, from £ 732 billion to £ 501 billion.
In June of 2012, the U.S. Federal Reserve slashed its corporate cash estimates by 22% from $2.232 trillion to $1.732 trillion. The Federal Reserve attributed its revision to better source data, including data from the IRS.
"This is a matter of great concern," says Anthony J. Carfang, a Partner of Treasury Strategies. "Corporations have been subjected to punitive regulatory and financial policies, based partly on the accusations of cash hoarding. We're now discovering the data were faulty. Indeed, corporate cash in the U.S. today is only 11% of GDP, barely up from the 10% level of the year 2000."
Monie Lindsey, a U.K. Managing Director at Treasury Strategies notes that these revisions are much more than mere statistical adjustments and that the explanations thus far have been unsatisfactory. "Regulators on both sides of the Atlantic are targeting money market funds, a key corporate cash management tool. There is considerable conversation about transaction taxes and cash repatriation issues. However, this all now appears to be based on erroneous information," says Lindsey.
Carfang calls for a regulatory time out: "Let's pause and make sure the numbers and underlying assumptions are correct before realigning major parts of the global financial system. We need to get this right."
About Treasury Strategies, Inc.
Treasury Strategies, Inc. is the leading Treasury consulting firm working with corporations and financial services providers. Our experience and thought leadership in treasury management, working capital management, liquidity and payments, combined with our comprehensive view of the market, rewards you with a unique perspective, unparalleled insights and actionable solutions. Visit TreasuryStrategies.com for more information.
Most Popular Stories
- Obama Administration Releases Proposal to Regulate For-Profit Colleges
- Apple, HP, Intel May Take a Hit from Slowdown in Smartphone Sales Growth
- Elizabeth Vargas' Husband Marc Cohn Addresses Rumors
- Keurig Adds Peet's coffee, Alters Starbucks deal
- FDIC Files Lawsuit on Behalf of Banks Allegedly Hurt by Libor Scandal
- Motley Crue's Nikki Sixx Marries Model Courtney Bingham
- U.S. to Relinquish Gov't Control Over Internet
- Chinese e-Commerce Giant Alibaba Gears for IPO in U.S.
- Some California Cities Seeking Water Independence
- Will Missing Malaysian Jet Prompt Aviation System Change?