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Through the Liquidity Looking Glass
For the second year, liquidity ranked as the top concern in the Global Treasury Investments Survey. Strong governance along with embracing transformative technology will be key to strengthening resilience amid uncertainty.
- Market & Investment Trends
- Risk Management
- Portfolio Construction
- Liquidity
Key Points
What it is
Liquidity is no longer a mere priority; it has become the lens through which every investment decision is viewed.
Why it matters
The combination of inflation shocks, geopolitical uncertainty and diverging monetary policies has reinforced the importance of staying flexible.
Where it’s going
Forward-thinking treasurers are reimagining short-term investment strategies and leveraging transformative technology to drive positive change. Yet, a divide is emerging.
Liquidity is no longer a mere priority; it has become the lens through which every investment decision is viewed. For the second year in a row, liquidity ranked as corporate treasurers’ number one concern in the Global Treasury Investments Survey, cited by 22% of respondents in 2025 and 25% in 2024 (Exhibit 1).
Flexibility: The New Currency of Treasury Strategy
Prioritizing liquidity has become an embedded in the mindset of treasurers. “The combination of inflation shocks, geopolitical friction and unpredictable policy shifts has only reinforced the importance of staying flexible,” noted Dan Farrell, head of international fixed income at Northern Trust Asset Management (NTAM).
Flexibility and agility mean segmenting the investment mix, for example, diversifying across short term investment staples such as deposits, securities and funds while maintaining a bias towards higher-quality, shorter instruments.
Duration measures the sensitivity of a security or portfolio to changes in interest rates. It often is used as a measure of risk to interest rate moves for fixed income securities and funds.
Walking the Tightrope Between Liquidity and Yield
Treasurers have spent the past three years adjusting to a monetary cycle unlike any in recent memory. The trajectory has slowed, but the sequencing and pace of cuts remain uneven. The survey findings reveal 21% of respondents listed falling interest rates as a top concern over the next 12 months (Exhibit 1), and the qualitative responses show an inflexion point in strategy with a switch in focus to the sudden disappearance of yield.
Dan LaRocco, head of liquidity at NTAM, explains: “Treasurers are rightly more concerned about falling rates now and reading the Federal Reserve’s signals the right way. The task is managing both upside and downside, making sure there’s no cash drag when rates fall but also capturing yield while it’s available.”
Active instruments could help here – money market fund (MMF) adoption continues to grow, which likely reflects the yield environment but also a growing awareness of their benefits (Exhibit 2). As boardrooms evolve their thinking, investment policies modernize and treasurers are encouraged to look beyond traditional cash instruments.
Money market fund benefits:
- Daily liquidity: MMFs can potentially provide T+0 access to cash, making them ideal for payroll, policy requirements or unexpected needs.
- Diversification: Exposure can be spread across counterparties and underlying securities, reducing concentration risk.
- Active management: Money market funds are able to quickly pass on higher rates during tightening cycles and can strategically term out maturities to preserve yield prior to rates falling.
- Resilience: They are tightly regulated, with AAA ratings and strict rules on credit quality, diversification and liquidity.
- Accessibility: The growing number of bank, asset manager and vendor portals gives visibility, comparability and ease of execution.
Money market fund considerations:
- Accounting treatment: For corporates, the deciding factor is often whether an investment qualifies as a cash equivalent – with particular considerations when it comes to variable value funds.
- Prime vs. government trade-off: In the U.S., prime funds offer slightly higher yields but carry the risk of fees or redemption gates, most corporates prefer the safety of government funds.
Tech Adoption: The Divide Between Resilience and Risk
Technology doesn’t change the aims of short-term investors but it does impact their ability to act on and deliver them. 58% of respondents are now using portals that enable real-time visibility on MMF yield, liquidity optimization and better risk management, leading to operational efficiencies and making diversification straightforward, quick and accessible.
Improvements and adoption in tech and AI have revolutionized stress event scenario planning and cash forecasting — something 28% of respondents selected as a top priority over the next 12 months (Exhibit 3). Unfortunately, the survey suggests that treasury teams are adopting technology at uneven rates, widening the resilience gap, and almost half of respondents say their current technology stacks lack integrated forecasting and risk analysis. Treasuries without integrated forecasting tools face a growing resilience gap — nearly half of respondents still rely on manual processes.
Digital investment portals, AI-driven dashboards and tokenization tools are changing how treasurers plan, compare and act. While the investment in tech may seem significant up front, it enables efficiency down the road. These systems can provide faster visibility into cash positions, identify counterparty exposure, and allow one-click execution across funds and deposits.
Actions for Treasurers
- Review investment policies to ensure access to resilient instruments.
- Diversify instruments and providers to mitigate concentration risk.
- Consider active management to adapt to rate changes and volatility.
- Adopt enabling technology for visibility, execution and forecasting.
- Implement scenario planning for rate and liquidity stress events.
Bottom Line
Treasurers who embrace flexibility, diversification and innovative technology adoption likely will be better positioned to protect liquidity, preserve yield and respond decisively to market shifts.
Main Point
Liquidity Ranks as Treasurers’ Top Concern
The need for instant access to cash remains fundamental to treasurers’ decision-making around short-term investment strategy. However, recent bouts of volatility and active central banks mean portfolio flexibility remains paramount in 2026.
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