An Argument For T-Bills Today

Stephane Lintner, CEO of Jiko
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CFOs should consider them a key building block for what’s needed in an inflationary and recessionary environment: liquidity, says Jiko’s Stephane Lintner.

The current macroeconomic environment has made liquidity and risk management more urgent than it has been in years for finance teams—no matter the size of their organizations.

One key to today’s challenges is making sure you have access to safe and high-yield T-bills, says Stephane Lintner, CEO and co-founder of Jiko, a fintech based in Oakland, California. Lintner shares how finance teams, from corporates to startups, can best navigate the economic environment.

How does the current macroenvironment impact CFOs and organizations broadly from a financial perspective?

Treasurers—who I like to remind people, are focused primarily on safety rather than performance—must now navigate factors such as volatility and liquidity risks. 

For years since 2008, when central banks injected cash into the economy, interest rates remained essentially at zero. Now that rates on U.S. Treasury bills have increased in the last year, treasurers that aren’t earning the baseline yield of T-bills are effectively losing money. 

In this environment, managing liquidity and counterparty risk and gaining simple access to high-yielding financial tools like T-bills is critical for organizations across industries and sizes.

What are some of the tools or strategies for CFOs to safely manage corporate cash in the current environment?

Cash is the lifeblood of most organizations. It enables investment, powers expansion and hedges against volatility. But in an inflationary and recessionary environment, cash cannot languish in bank accounts—it needs to be put to work through safe and secure investment tools.

Furthermore, firms across the digital asset industry and traditional finance are navigating a turbulent market right now, and many are looking to shore up cash to remain highly liquid. In this environment, finance teams must ensure that they are working with partners who do not have counterparty risk—and that they know their assets are safe and easy to access.

What should finance teams, including startup leaders, know about investing in T-bills?

As someone who witnessed the financial crisis from within Goldman Sachs, I firmly believe that T-bills represent one of the safest, more secure options for money storage, and are a primary building block of liquidity. They are often the first thing that banks and money market funds purchase and trade as a cash equivalent, and in my opinion, T-bills should be one of the first places many global corporates and cash-rich startups park their money as they focus on growth. 

This is true in any environment, but given how much T-bill rates have risen, it is critical that finance and startup leaders understand that they are leaving money on the table if they aren’t taking advantage of high T-bill yield, especially if you compare their risk profile to other instruments that involve more counterparties. And amid inflation, supply chain disruption and geopolitical conflict, it is all the more paramount to have cash deliver yield through safe assets. 

How has access to T-bills been cumbersome?

While U.S. Treasury securities are generally considered one of the safest investments in the world, particularly given the current elevated yields, straightforward access to them has historically been difficult and opaque. Money market funds, though a staple for corporate treasuries, often co-mingle T-bills with repurchase agreements and commercial paper. Outside of money market funds, T-bills may be purchased directly through brokerage platforms, but the experience is often manual, requires familiarity with securities trading, and may include minimum investment amounts, commissions and other fees, and withdrawal delays.

Finance teams and startup leaders can also go to the U.S. government’s Treasury Direct website, but this still presents challenges: firms have to hold the bills for 45 days before they can liquidate, and once they are able to liquidate, they have to work through a bank, broker or dealer to do so. The critical need for simple, low-cost access to T-bills is at the heart of why we launched Jiko Money Storage, which marries the yield and security of T-bills with the flexibility of a bank account.

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