In the table below we set out the key principles of cash management as they exist today and discuss how they might be changed by the introduction of the euro. The key criteria for successful cash management is an accurate and timely cash forecast. The introduction of the euro will not do away with need to forecast cash. However the cost of inaccurate forecasting across a number of euro accounts that are pooled will be less than that if they were each individual NCU accounts. A company that has significant operations in any member country will continue to require a local euro account.
Domestic transfers are less expensive than cross-border transfers.
Although the euro is a single currency, transferring euro from Paris to Frankfurt remains a cross-border transaction and the rules, regulations and central bank reporting requirements that currently apply to NCU transfers will remain in place. The cost of cross-border transactions post euro is likely to be a less than that for NCU transactions today but significantly more expensive than domestic transactions. It is hoped that price transparency, the holy grail of the single currency in many other markets, will extend to banking and that the more arcane methods of charging will gradually disappear. This process will be accelerated as international banks compete for domestic euro business in each country requiring national banks to provide similar terms to retain their traditional customers. Pooling cash of each subsidiary in each national currency can be costly and time consuming unless the values are significant.