Government Debt Management
Government securities usually play an important role in both developed and developing country economies, and the management of those security markets can be crucial for ensuring a robust and stable financial system. The legal regime that deals with this subject should provide for both the primary and secondary market for the securities. The rights and obligations of dealers; the procedures for public auctions, maturities of bills, and reg
istration and transfer of ownership; and the responsibilities of agent banks are all topics that should be covered in the law.
The law needs to provide a clear legal basis for the issue of debt and the statutory designation of the authorities that are empowered to manage government debt. The law that provides for the issue of government securities must contain sufficient provisions to govern the issuance, transfer, and redemption of those securities. To avoid a legal vacuum, those provisions that deal with “physical securities” need to be reviewed and replaced with new rules and procedures that cover book-entry or scripless securities.
The law should provide for registration, structure, and settlement, including those in book-entry form. The law must contain procedures and rules to establish ownership, transfer, and final settlement of debt by the government on the basis of book-entry or scripless form. It is also important for the law to recognize electronic evidence in a court of law to prove ownership and to ensure the legality of transactions affecting rights of parties.
