How to Develop A Framework for the Investment of Temporary Government Cash Surpluses

Author: Israel Fainboim Yaker, Mr. Sandeep Saxena, and Michael J. Williams

Volume/Issue: Volume 2020 Issue 003

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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Banks and Banking , Finance , Money and Monetary Policy , Public Finance , FADHTN , HTN , cash manager , surplus cash , cash surplus , cash balance , reverse repo , liquidity risk , cash buffer , market risk , debt management , market liquidity , Currencies , Government cash management , Government cash forecasting , Money markets , Credit risk , Global , Africa

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Summary

Well-developed cash management aims to improve government operational efficiency and facilitates better service delivery by ensuring liquidity to meet payment obligations as they fall due. Liquidity, however, comes at a cost. Governments can reduce the cost of maintaining liquidity by proactively managing their cash balance at an appropriate level and prudently investing any excess liquidity. This note discusses the policy framework and processes that governments should put in place to identify, guide, and govern the investment of their surplus cash resources.