The central government payment model

We are responsible for the central government payment model and for ensuring it is effective. A central part of the payment model is that we use commercial banks and existing infrastructure. Consequently, one important task is to procure framework agreements for payment services. Government agencies are obliged to use these agreements and are not allowed to use other bank services or other banks without our permission.

Government agencies' use of our agreements is stipulated by the Government. We procure three framework agreements; Payment Services, Card and Travel Account services and Prepaid Card.

The framework agreement for payment services specifies how the cash pool-structure is set up within the framework agreement banks. It specifies other rules and requirements that the banks must comply with to ensure perfect centralised liquidity management (liquidity settlement).

The framework agreement also specifies all services and conditions including prices. Thus, the agencies do not have to negotiate with the banks, which entails substantial administrative benefits.

The cash pool structure

We have arranged a special account structure within the four framework agreement banks (Danske Bank, Nordea, SEB and Swedbank), a cash pool. The aim is efficient use of the Government’s liquidity.

The cash pool structure.

The cash pool structure. Click on image for larger version.

The first level consists of the agencies' bank accounts, for all their payments such as taxes, transfers, wages, rent etc. The second level consists of the top accounts at the framework agreement banks. And the third level consists of our Treasury Single Account (TSA) at the Riksbank, the Swedish central bank. The TSA is one of the cornerstones of our model.

Three times a day the banks sweep the agencies' bank accounts. All liquidity is collected into the banks' top accounts. The net sum is settled with our TSA. This means that three times a day, all liquidity is pooled in our TSA, and the agencies' accounts are set at zero overnight.

The model is effective due to the use of the commercial bank infrastructure; lower liquidity requirements with concentrated payment flows; mandatory framework agreements and concentrated expertise.

Statistics, 31 December 2014

Government agencies: 225
Bank accounts: 3 300
No of payments: 164 million
Total cost: SEK 91 million
Government expenditure: SEK 900 billion
Turnover: SEK 6 000 billion
Debit cards: 45 000 debit cards, turnover of SEK 1.8 billion
Purchasing cards: 6 000 purchasing cards, turnover of SEK 73 million
Prepaid cards: 55 000 prepaid cards, turnover of SEK 1,2 billion
Travel accounts: SEK 2.6 billion turnover