Glossary

Decentralised Treasury is the system of financial management used by international companies with subsidiaries, in which funding activities, investment and foreign exchange decisions are made by local treasurers instead of one centrally located treasury team. From a foreign exchange risk management perspective, the main argument in favour of decentralised treasury is that it allows the firm to leverage valuable knowledge that only local treasurers can take advantage of. Detractors of decentralised treasury argue that it hinders exposure netting possibilities, thereby forcing the firm to execute unnecessary hedging.