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P ac ical inance o Policy
and decision make s
The goal o his p esen a ion is o p o ide p ac ical exe cises o policy
and decision make s, o p o ide be e egula o y in as uc u e o he
o me and achie e be e esul s o he o me .
Mazen Chehimi
Richa d beainy
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Case 1
Coca-Cola and Fac o ing
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Cu ency Risk
Managemen Th ough
Fac o ing
As o Oc obe 22, 2026, Ms. Linda Mo eau assumed he
ole o CFO a Coca-Cola In e na ional. In he s a egic
e iew o cu ency isk exposu es ac oss high- ola ili y
ma ke s, she p oposed e alua ing ac o ing as an ex e nal
isk managemen ool. This p esen a ion examines wha
ac o ing en ails, how i mi iga es cu ency isk, and
whe he i ep esen s a sound s a egic op ion o Coca-
Cola's eme ging ma ke ope a ions.
Mazen Chehimi
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Unde s anding Fac o ing: De ini ion and Mechanics
Wha Is Fac o ing?
Mazen Chehimi
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Fac o ing is a inancial a angemen whe e a
company sells i s accoun s ecei able o a
specialized ins i u ion— he ac o —a a
discoun . Ra he han wai ing 60 o 90 days o
cus ome paymen s, companies ecei e
immedia e cash, ypically 75% o 95% o he
in oice alue.
The ac o assumes esponsibili y o
collec ing paymen om cus ome s,
ans o ming unce ain u u e cash lows in o
immedia e liquidi y.
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How Fac o ing Reduces Cu ency Exposu e
Ins an Cu ency Con e sion
Coca-Cola ecei es immedia e paymen
in s able cu encies like USD o EUR,
elimina ing exposu e o local cu ency
dep ecia ion in ma ke s such as Tu key,
Egyp , o Sou h A ica be o e cus ome
paymen a i es.
Comp essed Exposu e Window
T adi ional 60-120 day paymen cycles
c ea e p olonged cu ency isk. Fac o ing
educes his window o ze o, p o ec ing
agains sha p exchange a e mo emen s
du ing collec ion pe iods.
C edi Risk T ans e
Unde non- ecou se ac o ing, he ac o
abso bs cus ome de aul isk—
pa icula ly aluable in coun ies wi h
agile banking sys ems, slow-paying
dis ibu o s, o ele a ed coun e pa y isk.
Mazen Chehimi
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S a egic Bene i s o Coca-Cola
Mazen Chehimi
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Fac o ing deli e s mul iple ope a ional and
inancial ad an ages, pa icula ly o
mul ina ional ope a ions acing cu ency
ola ili y and wo king capi al cons ain s in
eme ging ma ke s.
1- I hedges ( educes) cu ency ola ili y isk
2- i hedges ( educes) de aul isk, which is he
isk ha he buye will no pay he selle
3- i p o ides Immedia e liquidi y o he
company selling (ins ead o ecei ing 100% o
he money a e 90 days, hey ecei e 95% o
he money oday).
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Impo an Limi a ions o Conside
High Cos S uc u e
Fac o ing in ol es mul iple cos s: discoun
a es ( ypically 1-5% o in oice alue),
in e es cha ges on ad ances, and
adminis a i e ees. In ma ke s wi h al eady
hin ma gins, hese expenses can
signi ican ly e ode p o i abili y and ROI.
Ex e nal Dependence
Coca-Cola elinquishes di ec con ol o e
cus ome ela ionships and collec ion
p ocesses. The company becomes
dependen on he ac o 's e iciency,
cus ome se ice quali y, and collec ion
p ac ices—which may no align wi h
co po a e s anda ds.
Limi ed Applicabili y
In de eloped ma ke s wi h s able
cu encies, s ong banking sys ems, and
eliable paymen cycles (US, Wes e n
Eu ope, Japan), ac o ing adds cos wi hou
commensu a e bene i . These ma ke s
equi e di e en isk managemen
app oaches.
Mazen Chehimi
Richa d beainy
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S a egic Recommenda ion
Should you Apply ac o ing in you company?
Ta ge Ma ke s
Egyp , Tu key, A gen ina, Nige ia, Sou h A ica— egions wi h
ola ile cu encies and ex ended paymen cycles
In eg a ed App oach
Combine wi h in e nal hedging (ne ing, ma ching, leading &
lagging) and ex e nal ins umen s ( o wa ds, swaps, op ions)
Mazen Chehimi
Richa d beainy
I depends on he Case
Fac o ing is ecommended o high- ola ili y
cu ency en i onmen s only. I should be
implemen ed s a egically in subsidia ies
ope a ing ac oss he Middle Eas , A ica, and
La in Ame ica whe e cu encies luc ua e
d ama ically and collec ion delays a e
sys emic.
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Case 2
Nes le in Egyp
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Unde s anding he Calcula ions
His o ical Cos in CHF
18,450,000 EGP ÷ 75 = 246,000 CHF
This is he o iginal cos ansla ed a he Feb ua y 2027 exchange a e. (Closing Ra e)
Cu en Ra e Value in CHF
18,450,000 EGP ÷ 150 = 123,000 CHF
This is he same in en o y ansla ed a he Decembe 2027 exchange a e. (His o ical a e)
The mone a y / non-mone a y me hod ansla es mone a y i em (Cash-deb -AR-AP) a he
closing (cu en ) a e and non-mone a y i em a e e ained a his o ical cos .
The empo al me hod ansla es i ems ha ha e been p e iously e alua ed a he cu en
a e while i ems ha a e e ained a cos (no -modi ied ea lie ) unde his o ical a e
Mazen Chehimi
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Why he Me hods Di e
Cu en Ra e Me hods
All-Cu en and Cu en /Non-
Cu en
•In en o y ansla ed a yea -
end a e (150 EGP/CHF)
•Re lec s cu en economic
eali y
•Resul : 123,000 CHF
•Recognizes cu ency loss
immedia ely
His o ical Ra e Me hods
Mone a y/Non-Mone a y and
Tempo al
•In en o y a his o ical a e (75
EGP/CHF)
•P ese es o iginal cos basis
•Resul : 246,000 CHF
•De e s ecogni ion o cu ency
impac
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Key Takeaways o IFRS T ansla ion
1Me hod Selec ion Ma e s
T ansla ion me hod choice can c ea e 100% a iance
in epo ed in en o y alues— om 123,000 o 246,000
CHF in his case.
2In en o y Classi ica ion Is C i ical
Unde s anding whe he in en o y is mone a y s. non-
mone a y, o cu en s. non-cu en , de e mines
which exchange a e applies.
3Cu ency Risk Is Real
Eme ging ma ke ola ili y (like Egyp 's 50%
dep ecia ion) c ea es signi ican ansla ion exposu e
o mul ina ional co po a ions.
Mazen Chehimi
Richa d beainy
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Case 2
Nes le in Egyp
Case 3
Uk aine Cen al
Bank
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Money Supply and
Mone a y Policy
Unde s anding ese e equi emen s, money
c ea ion, and policy implemen a ion lags h ough
eal-wo ld scena ios
Mazen Chehimi
Richa d beainy
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The Uk aine Case S udy
Scena io O e iew
Uk ainian banking sys em holds 120.5 billion eu os in
cu en deposi s. The cen al bank main ains a
Requi ed Rese e Ra io (RRR) o 20%.
This case examines how changes in ese e
equi emen s a ec money c ea ion and explo es he
imeline o mone a y policy esponses du ing a
cu ency c isis.
Mazen Chehimi
Richa d beainy
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Pa 1: Calcula ing Requi ed Rese es
01
Gi en In o ma ion
Cu en deposi s: 120.5 billion EUR
Requi ed Rese e Ra io: 20%
02
Apply he Fo mula
Requi ed Rese es = Deposi s × RRR
RR = 120.5 × 0.20
03
Solu ion
Requi ed Rese es = 24.10 billion EUR
This amoun mus be held by banks and
canno be len ou
Mazen Chehimi
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Unde s anding Rese e Requi emen s
Wha A e Requi ed Rese es?
Requi ed ese es a e unds ha banks
mus hold and canno lend. They se e as a
bu e agains bank uns and gi e cen al
banks con ol o e money c ea ion.
The 20% Rule in Uk aine
Wi h a 20% RRR, o e e y 100 eu os
deposi ed, banks mus keep 20 eu os in
ese e and can lend ou 80 eu os.
Mazen Chehimi
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Pa 2: Money C ea ion Th ough RRR Changes
When he Requi ed Rese e Ra io dec eases om 20% o 12%, banks can lend mo e money. Le 's calcula e he impac .
S ep 1: Calcula e New Requi ed Rese es
A 12%: RR = 120.5 × 0.12 = 14.46 billion EUR
S ep 2: Find Excess Rese es F eed
24.10 − 14.46 = 9.64 billion EUR now a ailable o lend
S ep 3: Apply Money Mul iplie Fo mula : M = 1 / RRR
Mul iplie = 1 ÷ 0.12 = 8.33
S ep 4: Calcula e New Money (Money C ea ed = New Loans × Mul iplie M)
9.64 × 8.33 = 80.3 billion EUR in new money c ea ed
Mazen Chehimi
Richa d beainy
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The Money Mul iplie
E ec
20%
O iginal RRR
Mul iplie : 5.0
12%
New RRR
Mul iplie : 8.33
80.3B
New Money
Addi ional eu os
c ea ed
The dec ease in ese e equi emen s ampli ies he banking sys em's
abili y o c ea e money. Each eu o o eed ese es gene a es 8.33 eu os
h ough mul iple ounds o lending and edeposi ing.
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The Hypo he ical Ge man Economic Challenge
Cu en Si ua ion
O icial ins i u ions in Ge many s opped publishing eliable
public deb igu es a e 2037, c ea ing signi ican
unce ain y o in es o s and policymake s.
P oposed Solu ion
An in e na ional suppo package o $8 billion USD,
combined wi h comp ehensi e s uc u al e o ms, could
signi ican ly s abilize he economic si ua ion.
Key pa ame e s:
•MPC: 0.8
•Tax a e: 20%
Mazen Chehimi
Richa d beainy
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Lea ning ou come: Unde s anding
C owding Ou
Wha mechanisms can cause c owding ou e ec s in Ge many’s
economy?
Mazen Chehimi
Richa d beainy
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The C owding Ou Mechanism
Go e nmen Bo ows Hea ily
La ge-scale issuance o domes ic bonds o inance de ici
spending
C edi Realloca ion
Banks shi lending om p i a e sec o o go e nmen
secu i ies
In e es Ra es Rise
Inc eased demand o c edi pushes ma ke a es upwa d
P i a e In es men Falls
Fi ms and households educe bo owing and in es men
The key insigh : When go e nmen inances spending h ough domes ic bo owing a he han axes o ex e nal g an s, i
compe es wi h he p i a e sec o o limi ed c edi esou ces, ul ima ely educing p i a e in es men and consump ion.
Mazen Chehimi
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Lea ning ou come The Liquidi y T ap P oblem
Unde wha condi ions could Ge many expe ience a liquidi y ap whe e mone a y policy becomes ine ec i e?
Mazen Chehimi
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Causes o a Liquidi y T ap in Ge many
Deep Economic
Unce ain y
Lack o con idence in cu ency
s abili y and banking sec o in eg i y
unde mines he ansmission o
mone a y policy
Banking Sec o Fea s
Conce ns abou po en ial bank
ailu es lead agen s o hold physical
cash o o eign cu ency a he han
deposi s
Ine ec i e In e es Ra es
When a es a e al eady e y low,
u he educ ions p o ide no
incen i e o shi om money o
bonds o in es men s
C i ical Resul : E en when he cen al bank injec s liquidi y and expands he mone a y base, banks hold excess
ese es and households hoa d cash. Addi ional liquidi y ails o ansla e in o highe spending and in es men —
mone a y policy becomes powe less.
Mazen Chehimi
Richa d beainy
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Lea ning ou come: Calcula ing he Fiscal Mul iplie E ec
How much would Ge many’s na ional income expand om an $8 billion USD go e nmen expendi u e inc ease?
01
Compu e E ec i e MPC A e
Tax
MPC × (1 − ) = 0.8 × 0.8 = 0.64
02
Calcula e he Mul iplie
k = 1 / (1 − 0.64) = 1 / 0.36 ≈ 2.78
03
De e mine Income Change
ΔY = k × ΔG ≈ 2.78 × $8B ≈ $22.2B
Mazen Chehimi
Richa d beainy
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The Mul iplie Fo mula Explained
Key Fo mula
Whe e:
•MPC = 0.8
• ( ax a e) = 0.20
• ΔG = $8 billion
Why he Mul iplie Wo ks
Go e nmen spending c ea es a chain eac ion: ini ial expendi u e
becomes income o ecipien s, who spend 80% o hei a e - ax income,
c ea ing mo e income o o he s.
The p opo ional ax educes each ound o spending, bu he cumula i e
e ec s ill ampli ies he ini ial injec ion signi ican ly.
Wi h a mul iplie o 2.78, each dolla o go e nmen spending gene a es
nea ly h ee dolla s o o al economic ac i i y.
Mazen Chehimi
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Income Expansion: The Bo om
Line
$8B
Go e nmen
Spending
Injec ion
In e na ional suppo
package ully
deployed as iscal
s imulus
2.78
Fiscal Mul iplie
Each dolla gene a es
addi ional economic
ac i i y h ough
consump ion ounds
$22.2B
To al Income
Expansion
Es ima ed inc ease in
na ional income om
he iscal in e en ion
The analysis demons a es ha s a egic iscal policy, when p ope ly
calib a ed o Ge many’s economic pa ame e s, can gene a e subs an ial
mul iplie e ec s and meaning ully imp o e economic condi ions.
Mazen Chehimi
Richa d beainy
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Key Takeaways o Policy Design
Financing Ma e s
How go e nmen spending is inanced de e mines
whe he c owding ou occu s. Ex e nal g an s and ax-
based inancing minimize displacemen o p i a e
in es men .
Con ex Shapes E ec i eness
Mone a y policy loses ac ion in liquidi y aps. When
con idence is low and a es a e nea ze o, iscal policy
becomes he p ima y s abiliza ion ool.
Mul iplie s Ampli y Impac
Wi h an MPC o 0.8 and 20% ax a e, Ge many’s
mul iplie o 2.78 means well-designed iscal
in e en ions can gene a e ou sized e u ns o a small
economy.
Re o m Complemen s S imulus
The $8 billion suppo package mus be pai ed wi h
s uc u al e o ms— es o ing ins i u ional c edibili y,
anspa ency in deb epo ing, and banking sec o
s abili y— o maximize long- e m impac .
Mazen Chehimi
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Mazen Chehimi
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O he Re e ences and No able wo ks om CIRAME
Kaspa d, J. A., Khalil, F. C., & Kamel, C. A. (2025). Fac o s Con ibu ing o Non- inancial Pe o mance o Companies. In Sus ainable
Economic De elopmen : U ilizing Non-Financial Pe o mance, Sus ainabili y Repo ing, and Co po a e Go e nance (pp. 413-442). Cham:
Sp inge Na u e Swi ze land.
Kamel, C. A., Kaspa d, J. A., & Khalil, F. C. (2023). The In o ma ion Sys em o Lebanese Expo ing SMEs. Jou nal o Law and Sus ainable
De elopmen ,11(6), e1212-e1212.
Kaspa d, J., Chapellie , P., & Ge baix, S. (2017). PME e TIC: de l’app op ia ion à l’u ilisa ion pou une meilleu e pe o mance, une e ue
de la li é a u e. P oche-O ien É udes en managemen ,29, 21-36.
Makki, M., Kaspa d, J., Khalil, F., & Mawad, J. L. (2024). Renewable Ene gy Consump ion De e minan s: Do They Di e be ween Oil-
Expo ing Coun ies and Oil-Impo ing Ones?. Sus ainabili y,16(17), 7295.
Ja a igo zin, S., Khalil, F. C., Khalil, L. J., & Kaspa d, J. A. (2025). Machine lea ning-based localized p edic i e modeling o household ene gy
consump ion in he Ne he lands. Ene gy and Buildings, 116420.
