Multi-currency center definition
/What is a Multi-Currency Center?
A multi-currency center is a cash pool in a cluster of subsidiary bank accounts and a concentration account into which funds flow from the subsidiary accounts. If a company pools all of its foreign currency accounts in a single location, this is called a multi-currency center arrangement. Multi-currency centers are generally easier to manage, but transactions are more expensive than under a single currency center model.
Advantages of a Multi-Currency Center
There are several advantages associated with operating a multi-currency center system, which are as follows:
Reduced exchange fees. An advantage of having a multi-currency center is that currencies are pooled, making it less expensive to make payments in foreign currencies from a company’s own resources, rather than having to pay an exchange fee to acquire the foreign currency from a third party.
Centralized management. A group of specialists can monitor currency inflows and outflows, and aggregate investments and payments to minimize costs.