Risk Management of the Central-Government Debt

Through borrowing and debt the central government is exposed to the development in interest rates (interest-rate risk), exchange rates (exchange-rate risk) and the risk of financial loss as a consequence of a counterparty's default on its payment obligations (credit risk). Furthermore the management of government debt entails operational risks.

The management of each type of risk reflects Government Debt Management's primary objective to achieve the lowest possible long-run borrowing costs, while taking the degree of risk into account.