Is your corporate cash resilient in a crisis?

What are the three tests?

Test 1: Concentration under stress

• How much depends on one bank?
• One clearing system?
• One jurisdiction?
• One fund manager?

For U.S. corporate cash, deposit protection depends on account ownership and the insured institution, not simply the number of accounts. FDIC guidance covers qualifying corporate deposits up to $250,000 at one insured institution; accounts held by the same corporation for different divisions or purposes are aggregated. Separately incorporated subsidiaries engaged in independent activity may have separate coverage. Confirm the structure before treating balances as protected.

Test 2: Access, not just solvency

• How quickly can we move funds?
• What is our exposure to settlement cycles?
• Could cash be trapped in local entities?

Test 3: Transparency

• Do we see all costs and fees?
• Do we have regular exposure reporting across instruments?
• Do we know where our cash truly sits, including indirect exposures through funds?

For a U.S. money market fund, review the fund type, portfolio exposures and applicable liquidity-fee arrangements rather than treating it as an insured bank deposit. The SEC’s July 2023 reforms removed the temporary redemption-gate provisions and introduced liquidity-fee requirements that differ by fund type. A historical warning about generic gates should not substitute for the actual fund terms.

What does a resilient design look like?

Common themes include diversification across counterparties and instruments, appropriate maturities, better data across accounts and regular review rather than an annual exercise. Which apply depends on your circumstances.