Politics and volatility at Risk Europe 2003

Sylvain de Forges, chief executive of Agence France Trésor, the French government debt agency, provided insight into the unique world of government debt risk management during his keynote address to Risk’s eighth European risk management conference in Paris on April 8. The risk management techniques used in business and banking are of little use in government debt management, which is driven and constrained by political goals, de Forges said.

His agency manages a E700 billion debt portfolio, with E40 billion of interest payments that represent 17% of the yearly general expenses of the French state. In 2000, the French government put a now-suspended swap portfolio programme in place in an attempt at duration management, but the increase in market volatility last year made it too expensive. Its suspension was also partly due to public accounting – usually conducted on a pure cash basis – not being able to effectively accommodate a

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