The financialization of the state: Government debt management reforms in New Zealand and Ireland

Abstract

The financialization of sovereign debt management has received attention in comparative political economy studies. While previous studies have highlighted the cross-national commonality of this process and the congruence of interests between finance and governments, the analysis of the role of finance and state agency in domestic reform processes is still under-exposed. By analysing the financialization of government debt management in the two early adopter countries, New Zealand and Ireland, this study seeks to close this gap. The study shows that differences in the structure of financial markets and the civil service systems resulted in different policymaking processes through which Treasury civil servants brought financial economics into the reforms. In New Zealand, economists had an in-house position within the Treasury and were able to frame the decision-making process (ideational explanation), while in Ireland, finance successfully lobbied senior civil servants who sponsored these efforts (interest explanation). With this finding, this article reveals the multiple channels that lead to sovereign debt management financialization.