Government Cash Management: Relationship between the Treasury and the Central Bank

Technical Notes and Manuals, January 16, 2013

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Technical note and manual (TNM) addressing:
- Interaction between treasury cash management and monetary policy operations within the wider context of the respective economic responsibilities of the ministry of finance and the central bank.
- Institutional arrangements for an effective relationship between the treasury and the central bank.
- Contractual arrangements between the treasury and the central bank for the provision of banking and other services.
Target audience:
- Developing countries reforming cash management operations.
- Jurisdictions contemplating more active cash management.
- Situations with operational policy differences between the treasury and the central bank.
Availability:
- Full text also available in Spanish.

Interaction between treasury cash management and monetary policy operations:
- Focus on how cash management practices can influence or interact with monetary policy instruments and operations.
Institutional arrangements:
- Examination of institutional frameworks that support an effective treasury–central bank relationship.
Contractual and service arrangements:
- Analysis of contractual terms and service provisions for banking and other services provided by the central bank to the treasury.

Relevant for reform design:
- Guidance intended to inform reforms of government cash management and the design of operational arrangements between treasuries and central banks.
Emphasis on clarity of responsibilities:
- The TNM underscores the importance of clearly delineated economic responsibilities of the ministry of finance and the central bank to avoid operational conflicts.
Contractual clarity:
- Recommends well-defined contractual arrangements for provision of banking and related services between treasury and central bank.

Subject: Banking, Commercial banks, Currencies, Financial institutions, Government cash forecasting, Government cash management, Money, Public financial management (PFM), Treasury Single Account
Keywords: Africa, balance, banking system, central bank, central bank recapitalization, Commercial banks, Currencies, debt management, fiscal policy, Government cash forecasting, Government cash management, interest rate, market, monetary policy, monetary policy operation, policy rate, public finance, public financial management, TNM, treasury, treasury single account

This Technical Guidance Note should not be reported as representing the views of the IMF. The views expressed in this Note are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

IMF Technical Notes and Manuals — Government Cash Management: Relationship between the Treasury and the Central Bank