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Crown Financial Asset Management: Objectives and Practice

Author

Listed:
  • Arthur Grimes

    (Institute of Policy Studies, Victoria University of Wellington)

Abstract

This paper analyses key issues that may be relevant to setting the Crown's overall objectives and practices for financial asset and liability management. It examines implications of the nature of the Crown's balance sheet for asset and liability management and investigates the appropriate approach of the Crown towards managing risk (concluding that a risk averse approach is warranted). The issue of centralisation versus decentralisation of Crown asset and liability management is analysed both from a portfolio management perspective and from an organisational design perspective. Insights from private sector financial conglomerates are also incorporated. The paper concludes that individual Crown financial entities should each continue to be responsible for setting their own strategic asset allocation, after taking into account the nature of their liabilities. A central Crown body should, however, monitor and aggregate information from each of these entities and be delegated the responsibility and power to manage risks to the overall Crown balance sheet.

Suggested Citation

  • Arthur Grimes, 2001. "Crown Financial Asset Management: Objectives and Practice," Treasury Working Paper Series 01/12, New Zealand Treasury.
  • Handle: RePEc:nzt:nztwps:01/12
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    File URL: http://www.treasury.govt.nz/publications/research-policy/wp/2001/01-12/twp01-12.pdf
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    Citations

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    Cited by:

    1. Nick Davis, 2001. "Does Crown Financial Portfolio Composition Matter?," Treasury Working Paper Series 01/34, New Zealand Treasury.
    2. Wilson Au-Yeung & Jason McDonald & Amanda Sayegh, 2006. "Australian Government Balance Sheet Management," NBER Working Papers 12302, National Bureau of Economic Research, Inc.
    3. Craig Fookes, 2011. "Modelling Shocks to New Zealand's Fiscal Position," Treasury Working Paper Series 11/02, New Zealand Treasury.
    4. Udaibir S. Das & Yinqiu Lu & Michael G. Papaioannou & Iva Petrova, 2013. "Sovereign Risk and Asset and Liability Management—Conceptual Issues," Journal of Reviews on Global Economics, Lifescience Global, vol. 2, pages 330-355.
    5. Michael Littlewood, 2010. "Pre-funding a government's future financial obligations - the New Zealand Superannuation case study," New Zealand Economic Papers, Taylor & Francis Journals, vol. 44(1), pages 91-111.
    6. Eric Hansen, 2003. "Objectives, Targets and Instruments for Crown Financial Policy," Treasury Working Paper Series 03/21, New Zealand Treasury.

    More about this item

    Keywords

    Crown balance sheet; Public debt management;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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