The Federal Republic of Germany - Finance Agency (Finance Agency) is the central service provider for the Federal Republic of Germany's borrowing and debt management. It was established on September 19, 2000, and is based in Frankfurt am Main, Germany's main financial center. The company, which is wholly-owned by the Federal Republic of Germany, represented by the Federal Ministry of Finance, performs functions in connection with budget and short-term liquidity funding which were previously divided between the Federal Ministry of Finance, the Deutsche Bundesbank and the Federal Securities Administration.
The Finance Agency currently has around 300 employees and acts as the interface between politics and the financial markets. For this reason, it has to address both the requirements of the Federal Government and the needs of market participants.
The instruments at the Agency's disposal on the one hand and its organizational and personnel structure on the other are designed to enable it to respond to the rapidly changing needs and requirements of the financial markets. The resulting synergies make it possible to achieve sustained improvements in the funding conditions for the Federal Republic of Germany, lower its interest costs in the medium term and optimise the risk structures in its debt portfolio.
Additionally Finance Agency gathered investment management know-how by the integration of the Financial Market Stabilisation Fund (Sondervermögen Finanzmarktstabilisierung, FMS; formerly SoFFin) from the Federal Agency for Financial Market Stabilisation (Bundesanstalt für Finanzmarktstabilisierung) as from January 2018. After Finance Agency performed the funding of the FMS already since 2008, it is now also in charge of managing SoFFin's Federal shareholdings in Commerzbank AG, Hypo Real Estate Holding GmbH and Portigon AG. Further holdings for the Federal Government may result from stabilisation measures of the Economic Stabilisation Fund that was established in 2020 due to the coronavirus pandemic.
Since the Parliament's budget law applies to the Federal Government's borrowing and its debt management activities, Finance Agency is subject to special public control - defined by the Federal Government Debt Management Act (Bundesschuldenwesengesetz). Budget experts representing the different parliamentary groups of the German Bundestag set up the so-called Federal Financing Committee to carry out this important task.
The responsibilities of the Finance Agency include first and foremost services in connection with the issuance of German Government securities, borrowing in the form of German-type promissory notes (Schuldscheindarlehen), the use of derivative financial instruments and the execution of money market transactions (borrowings and lendings) to balance the Federal Republic of Germany's account at the Deutsche Bundesbank. The Finance Agency's spectrum of services for the Federal Ministry of Finance also includes market analysis and the development of models for portfolio management, risk-monitoring and -management, management of the holdings of the FMS as well as investor, press and public relations for German Government securities and other areas within its responsibility.
Since 1 August, 2006 the Finance Agency is also responsible for the management of private customer accounts and the federal debt register. Based on the FMSA Reorganisation Act (FMSA-Neuordnungsgesetz) the Finance Agency was entrusted with maintenance of the FMSA as from 1 January 2018. FMSA still independently and legally oversees the two wind-down agencies FMS-Wertmanagement and Erste Abwicklungsanstalt.
Based on the Economic Stabilisation Fund Act the Finance Agency was also entrusted with the administration of the Economic Stabilisation Fund which was founded by the German Government within the scope of the coronavirus pandemic to stabilise companies in the real economy.
On the financial markets, the Finance Agency acts solely in the name and for the account of the Federal German Government. Its most important task is guaranteeing the solvency of the Federal Government at all times coupled with maintaining and extending the latter’s benchmark position as a Government bond issuer within the Eurozone.