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Interactions of sovereign debt management with monetary conditions and financial stability

  • Bank for International Settlements
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    The financial crisis dramatically altered the environment in which sovereign debt managers and central banks had to operate. The interactions of sovereign debt management (SDM) with monetary conditions and financial stability was heightened in these historically unusual circumstances. This report discusses the implications of these interactions for central banks. It was prepared by a Study Group chaired by Paul Fisher of the Bank of England. The report concludes that in such circumstances, or where financial systems are still developing, there is benefit in debt managers taking a broad view of cost and risk. Central banks can likewise benefit from keeping abreast of SDM activities. Recent experience confirms that medium-term strategic outcomes for the maturity structure and risk characteristics of outstanding debt do matter, for financial stability in particular. This underscores the importance of close communication among the relevant agencies, yet with each agency maintaining independence and accountability for its respective role, consistent with internationally agreed principles for sovereign debt management.

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    This book is provided by Bank for International Settlements in its series CGFS Papers with number 42 and published in 2011.
    ISBN: 92-9131-871-X
    Handle: RePEc:bis:biscgf:42
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    13. Joyce, Michael & Lasaosa, Ana & Stevens , Ibrahim & Tong, Matthew, 2010. "The financial market impact of quantitative easing," Bank of England working papers 393, Bank of England.
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    16. Francisco Buera & Juan Pablo Nicolini, 2000. "Optimal Maturity of Government Debt with Incomplete Markets," Econometric Society World Congress 2000 Contributed Papers 1769, Econometric Society.
    17. Okina, Kunio & Shiratsuka, Shigenori, 2004. "Policy commitment and expectation formation: Japan's experience under zero interest rates," The North American Journal of Economics and Finance, Elsevier, vol. 15(1), pages 75-100, March.
    18. Bosch, Darrell, 2002. "Organisation for Economic Co-operation and Development, Income Risk Management in Agriculture: OECD, Paris, France, December 2000, 152 pp., US$ 42.00, Softcover, ISBN 92-64-18534-8," Agricultural Economics, Blackwell, vol. 27(1), pages 88-90, May.
    19. Gauti B. Eggertsson & Michael Woodford, 2003. "The Zero Bound on Interest Rates and Optimal Monetary Policy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(1), pages 139-235.
    20. International Monetary Fund, 1995. "The Role of Foreign Currency Debt in Public Debt Management," IMF Working Papers 95/21, International Monetary Fund.
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    22. Missale, Alessandro, 1997. " Managing the Public Debt: The Optimal Taxation Approach," Journal of Economic Surveys, Wiley Blackwell, vol. 11(3), pages 235-65, September.
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