From the perspective of treasury and finance departments, the uncertainties just keep coming, whether it's the European debt crisis, the fiscal cliff or new regulations. Those uncertainties are encouraging a significant portion of companies to continue to build their cash reserves, which were already at historically high levels.
A recent SunGard survey of treasury executives at more than 200 corporations worldwide shows that 37% increased their cash reserves over the last 12 months, while 40% said there was no material change in their cash holdings and 23% said they had decreased their cash reserves.
One key factor going into year-end is the anticipated expiration of unlimited FDIC coverage on non-interest-bearing bank accounts, a development that SunGard says is driving the increased interest in money-market funds. According to the survey, companies that use money market funds on average have about 50% of their cash invested in the funds, up from 39% in the 2011 survey.
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