The State Treasury is responsible for the central government’s cash management. The most important function of cash management is to manage and safeguard the government’s liquidity. According to the cash situation, the State Treasury either invests cash funds or borrows from the financial markets.
The State Treasury invests cash funds in financial instruments with a remaining maturity of one day to a couple of months. Borrowing is mainly in the form of overnight loans.
Investments must be as riskless as possible, and it must be possible to liquidate these investments in a cost-efficient manner. The maximum amount that can be invested by the government with any single market participant is determined in accordance with the credit rating.
The State Treasury decreases the credit risk by placing the cash funds in the form of collateralized investments. It utilizes, for example, Triparty repo agreements and invests cash funds with sovereign governments.