A comprehensive strategy for funding the balance sheet and allocating capital across domestic, international, and foreign exchange markets is known as integrated treasury. With this strategy, the bank is able to maximize asset-liability management and take advantage of arbitrage opportunities. In the past, a bank's forex dealing room handled foreign exchange dealings that mostly resulted from merchant transactions (forex purchases from and sales to customers) and cover activities that followed in the interbank market. The domestic treasury and investment operations were separate from a bank's foreign exchange transactions.
Treasury operations were classified as a cost center that was solely responsible for managing reserves (CRR and SLR) and the funds that result from such management. Additionally, the Treasury invested in both government and non-government securities. Due to interest rate deregulation, exchange control liberalization,
the
growth of the forex market, the introduction of derivative products, and technological
advancements in settlement systems and dealing
environments, there is a need
for
integration of foreign exchange
dealings
and domestic
treasury operations.
The integrated treasury performs a variety of tasks in
addition to its
usual activities as a
forex dealing room and
treasury unit.