Re: [Debconf-team] [Debconf13-localteam] DC13 currency issues (renamed)
On 27/07/12 16:14, Marc SCHAEFER wrote:
> On Fri, Jul 27, 2012 at 03:35:26PM +0000, Daniel Pocock wrote:
>> e) set a deadline for getting signed sponsorship pledges, and tell
>> people not to buy plane tickets until DebConf hits the sponsorship target
>
> to protect Debconf if the bills are paid in CHF and the money is received
> in NON CHF currency:
>
> f) ask the Swiss government for a currency risk protection:
>
> http://www.kmu.admin.ch/themen/02395/02417/02418/index.html?lang=fr
>
> They propose a few solutions, for the export industry. Organizing a Debconf
> in CH is not exactly an export industry, but you are in effect charging
> foreigner in a foreign currency for services that will be delivered
> in Switzerland, so it could possibly apply. Associations can apparently
> apply to specific insurances.
>
> SERV, a public insurance service covering not only change risks.
>
> to protect individuals/enterprises today, while still paying later:
>
If we can get a sponsor, government or university to underwrite the
event, that is the ideal option.
My definition of underwrite: they agree to pay any shortfall, whether it
is due to currency market movements, platinum sponsor goes bust, food
prices rise, etc. An underwriter doesn't pay anything though if
everything just works, so it is like having insurance.
The banks offer such insurance in the form of currency options, e.g. a
call option on CHF. You basically pay the bank a fee (like an insurance
premium) to buy the option, and if CHF goes up, the bank pays out cash
to cover the funding gap.
However, if we knew that the cost of the options was, for example, 3% of
the funding amount, we could just offer a 2.5% discount to sponsors who
pay up front, and then convert their money to CHF today - the customer
saves, and the bank gets nothing (please don't be sad for the bank)
> g) use fixed-rate conversion (future rate is protected) through
> Swaps (I am however no economist) -- ask your local bank --
> apparently these are quite cheap.
I think you mean options or forward rate agreements. We would only use
a swap if we had cash already.
http://en.wikipedia.org/wiki/Forward_rate_agreement
The difference for DebConf:
Options: we pay a premium for the service from the bank. The bank
doesn't care about our credit status, because we pay the premium up front
Forward: if the CHF goes in reverse, we could end up owing money to the
bank - as long as the sponsors pay up, we don't lose, everything is cost
neutral. However, the bank probably doesn't care about our sponsors,
they will probably want to anticipate this risk by making a credit
check. As DebConf is not an organisation and has no formal financial
records, the bank may not give credit approval.
I didn't want to mention these things in my earlier email because I
think we just end up paying fees to the banks and also because of the
credit risk issue. There is a real risk that if we enter into currency
agreements with a bank, and then one of our sponsors goes bust, the bank
would seize all the money in the bank account and shut down DebConf.
> i) they should deposit the money at their bank as soon as they made
> any promise, on a CHF account.
>
That is basically the same as my option (a), collect the money early.
It doesn't matter if the customer converts the money to CHF or if we do
it. There are competitive brokers in Switzerland like
http://www.wechselstube.ch who charges less than 1%, it may be better
for the local team to arrange such a facility
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