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2014 and 2015 are proving to be years of adjustment for corporates at multiple levels. From a macroeconomic perspective, emerging markets (EMs) have started to slow down after decades of leading global economic growth, with more developed markets like the US now assuming the mantle of growth generators.
Corporates and their treasurers are faced with the constant challenge of finding new ways to generate higher returns and efficiently manage capital. While emerging markets (EMs) have presented a wealth of growth opportunities for diversifying revenue streams to capture higher returns, this has not been without some inherent challenges.
The phenomenon of “trapped cash” is increasingly common, as US-based multinationals build large stockpiles of cash held overseas - usually for regulatory or tax reasons.
Trapped cash might be better described as ‘restricted’ cash as it refers to cash surpluses in foreign countries where mobility is restricted by regulation. This restriction becomes a problem if the trapped money is urgently required but cannot be accessed and moved easily or quickly to where it is needed.