The functions of Government Debt Management are divided into front, middle and back offices. Separation of functions and clear procedures reduce operational risks and ensure a clear distribution of responsibilities. This facilitates internal control. The placement of the tasks at Danmarks Nationalbank makes it easier to monitor interaction between government debt policy, monetary policy and financial stability. This is consistent with the IMF's recommendations (Stockholm principles).
Functions of Government Debt Management
The middle office formulates the government debt policy and prepares proposals for borrowing strategies and risk management. The middle office also lays down guidelines for the front office with regard to issuances, buy-backs and swap transactions in accordance with the agreed strategies. Moreover, the middle office lays down the framework for the individual auctions and undertakes the overall administration of foreign borrowing, on-lending and government guarantees and participates on the SPF Board and in the financing group for subsidised housing.
The front office is responsible for the operational element of the government debt policy within the framework of the monthly guidelines. This comprises issuance of government securities, including holding of auctions, buy-backs, securities lending and swap transactions. It also determines market terms for on-lending.
The back office settles payments concerning central-government debt, including servicing of debt and swaps. The Government Debt Accounting prepares the national accounts together with the Ministry of Finance.
The government debt area is audited by Danmarks Nationalbank's auditors on behalf of Rigsrevisionen (the national audit office of Denmark). Danmarks Nationalbank's auditors ascertain that the government debt accounts give a true and fair view, i.e. that they are without significant errors and omissions. In addition, Rigsrevisionen may assess whether the government debt is managed in an appropriate way. The results of its investigations are published at www.uk.rigsrevisionen.dk.