OECD Working Papers on Sovereign Borrowing and Public Debt Management

OECD Working Papers on Sovereign Borrowing and Public Debt Management provide authoritative information on technical and policy issues in the area of public debt management (PDM) and government securities markets. Studies track closely structural issues, trends and challenges in government debt policies and markets. Topics include pressing government debt policy issues such as the measurement of sovereign risk; how to contain the cost of government borrowing operations; the use of electronic systems; sovereign asset and liability management (SALM); liquidity of markets in government debt; advances in risk management; the role of derivatives in PDM; linkages between PDM and monetary policy and the role of debt managers in pricing and managing contingent liabilities.

These studies are prepared for dissemination among sovereign debt managers, financial policy makers, regulators, financial market participants, rating agencies, and academics. By providing information on this highly specialised field of government activity and policy, papers aim to stimulate discussions among a wider audience as well as further analysis.


The liquidity buffer practices of public debt managers in OECD countries

This paper summarises and discusses results from a survey of the liquidity buffer practices of debt managers in OECD countries. It includes detailed information on their purpose, cost, level and investment. Where possible and relevant, comparisons are made with the results of an earlier survey conducted in 2011. Country case studies for Denmark, Portugal and Turkey provide a deeper insight into liquidity buffer practices.

While the level, investment, transparency and other governance features vary, the survey results show that keeping a liquidity buffer is a common practice among debt management offices in OECD countries. Sovereign debt managers view a liquidity buffer as an effective tool to address re-financing risk and liquidity risk that may arise for reasons such as, unexpected increases in borrowing needs, short-term mismatches in fiscal cash flows or the temporary loss of market access.


Keywords: Public debt management, cash management, liquidity risk, refinancing risk
JEL: H63: Public Economics / National Budget, Deficit, and Debt / Debt; Debt Management; Sovereign Debt; G11: Financial Economics / General Financial Markets / Portfolio Choice; Investment Decisions; H68: Public Economics / National Budget, Deficit, and Debt / Forecasts of Budgets, Deficits, and Debt
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