OVERVIEW

Sovereign Asset and Liability Management: An E-learning Training Course

This e-learning course provides an overview, description, and rationale for implementing Sovereign Asset and Liability Management (“SALM”).  Both theoretical and empirical information are presented in the course, as well as basic to advanced concepts.

The intended users of the E-learning course and supplemental materials are practitioners, policy makers, academics, researchers, and students.  The course consists of four (4) individual modules covering specific topics in SALM; each module can be reviewed individually or within the comprehensive framework of the entire module.

Module 1: Sovereign Asset and Liability Management Overview

Module I defines fundamental concepts and the underlying rationale for implementing SALM.  The module presents two key concepts within SALM, the conceptual balance sheet and a basic introduction to contingent liabilities.

I. Definitions

II. Rationale

III. The Conceptual Balance Sheet

IV. Contingent Liabilities

Module 2: Sovereign Asset and Liability Management Framework

Module II presents the accounting/financial balance sheet and how it differs from the conceptual balance sheet illustrated in Module I. Three (3) different SALM frameworks are illustrated from simplified to more advanced versions. The module provides a detailed examination of contingent liabilities that expands upon the foundational information on this topic provided in Module I. 

I. The Accounting/Financial Balance Sheet

II. Sovereign Asset and Liability Management Framework: Approach I

III. Sovereign Asset and Liability Management Framework: Approach II

IV. Sovereign Asset and Liability Management Framework: Approach III

V. Contingent Liabilities

i. Explicit Liabilities: Guarantees

ii. Implicit Liabilities: Financial Sector Bailouts and Natural Disasters

a. Financial Sector Bailouts

b. Natural Disasters

iii. Managing and Mitigating Contingent Liabilities

 

Module 3: Institutional Framework

Module III focuses on institutional characteristics and organizational issues that impact SALM.  The SALM framework from the perspectives of both an Asset and Liability Management Office and Debt Management Office are discussed.  Potential conflicts of interest in the areas of policy making and operations are also addressed in the module.

I. Institutional Setting

II. Asset and Liability Management Office

III. Debt Management Office

IV. Potential Conflicts of Interest Between the Central Government and Central Bank

Module 4: Risk Management

In Module IV we will examine balance sheet risks, along with matching foreign currency, interest rates, maturities, and information on synthetic financial instruments to hedge risk.  We will then turn our attention to some of the SALM methodologies from basic approaches and provide resources on more advanced techniques.

I. Balance Sheet Risks

i. Currency Matching

ii. Interest Rate Matching

iii. Maturity Matching

iv. Derivatives

II. Methodologies

i. Initial Methodologies

ii. Advanced Methodologies

 

This module was prepared by:

Debt and Development Finance Branch
Division on Globalization and Development Strategies
United Nations Conference on Trade and Development (UNCTAD)
Palais des Nations, Geneva, Switzerland
Contact: debt@unctad.org