Treasury Management for Governments

Payments and receipts depend upon a financial transaction network.  What are the tools used in such a network?  Can the treasury improve its efficiency through a better selection of tools?  How can networks be analyzed?

Procuring bank services.  Banks may provide many services to treasuries.  They should be treated not as enemies, nor as close friends, but as business partners.  Selecting banks to perform services should be done in a rational and professional manner.

Other (bank-based) financial tools.  Treasuries may wish to use other tools provided by banks to improve their control over payment flows and broaden the ways they can accommodate the financial tools used by their citizens and vendors.

Electronic funds transfer.  The automated clearinghouse (ACH) system works like traditional check clearinghouses, but debits and credits are exchanged in electronic form.  How does this benefit a treasury?  Many treasuries and central banks prefer the real time gross settlement (RTGS) system.  What are its advantages and risks..

Check truncation and conversion.  The United States has taken steps to maintain check payments, but to eliminate the flow of paper that they create. 

Check clearing.  Checks and drafts are a very old payment mechanism.  The basics of check clearing were established 300 years ago.  These principles also form the basis of electronic and credit transactions.

Currency and coin.  These remain a significant payment mechanism in both emerging markets and in the developed markets.  If governments use this payment medium, what are its advantages and its problems ?

To Read Further ... 

Physical payment instruments - Coins, currency, and checks

Banking tools for cash management.

Electronic payment systems - ACH and RTGS

Praxis: Cash -  Payments systems and transaction mechanics