Cash Interest Rates

This estimates the ‘cost’ of leaving surplus cash at the custodian compared to alternatives. One example of the opportunity cost is the spread between the interest paid by the custodian and the rate achievable by investing in liquid but low risk AAA-rated money market funds (for major currencies). Comparisons with standard interbank rates and the rates being paid by custodians to an investor’s peers are also provided.

 

Interest Rate Spread

 

Key metrics

  • The variances between an investor’s credit interest rate and overnight interbank rates and yields on money market funds.
  • The opportunity costs compared against a peer group and AAA-rated money market funds.

Benefits

  • Identifies the level of interest an investor could expect based on the average of a peer benchmark.
  • Facilitates the negotiation of improved rates for cash deposits and identifies the benefits of alternative methods of cash management.

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