Primary Dealers in Government Securities

In the last 10 years there have been a growing number of countries that have established or are in the process of establishing a primary dealer system. This Special Issues Paper discusses the role of primary dealers, as well as theoretical, operational, and technical issues related to the establishment of a primary dealer system, in the overall management of public debt for countries that may be considering taking this step. Drawing on a 2001 survey of country practices, the paper discusses the rationale, costs and benefits, key prerequisites, as well as selection criteria, obligations, and privileges of a primary dealer system. It also attempts to determine the conditions under which a primary dealer system would make a positive contribution to the functioning and development of the government securities market.