Central Bank Reserve Management Practices : Insights into Public Asset Management
The World Bank Treasury’s Reserve Advisory and Management Partnership (RAMP) conducted its third survey on reserve management practices in 2021. One hundred and nineteen central banks, from different regions, income groups, and reserve levels, cont...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/undefined/208161634873587549/Central-Bank-Reserve-Management-Practices-Insights-into-Public-Asset-Management http://hdl.handle.net/10986/36442 |
| Summary: | The World Bank Treasury’s Reserve
Advisory and Management Partnership (RAMP) conducted its
third survey on reserve management practices in 2021. One
hundred and nineteen central banks, from different regions,
income groups, and reserve levels, contributed to the
survey, which included questions on investment policies,
asset allocation, risk management, environmental, social,
and governance (ESG) investing, and business continuity. The
pandemic underlined the importance of safety and liquidity
for reserve portfolios. The authors find that central banks
maintained their conservative investment approach, focusing
on high-quality fixed-income assets denominated in US
dollars and euros. At the same time, against a backdrop of
ultra-low interest rates in major economies, we also observe
that central banks continued, in their search for yield, to
gradually diversify their reserves into more currencies and
asset classes within fixed income. Survey results also
indicate that central banks’ risk management practices show
room for improvement, especially in institutions that have
expanded into nontraditional asset classes, including those
that invest in corporate credit. Meanwhile, reserve managers
could further enhance internal risk and reporting practices
to strengthen oversight. ESG investing is still rarely
adopted by central banks, and fewer than a quarter of
respondents have included ESG objectives in their investment
policy. Crucially, this is largely explained by the focus of
reserve portfolios on high-quality fixed-income assets,
among which ESG instruments and strategies are rarely
encountered. We learn that, in order to maintain business
continuity, central banks implemented home-based work in
2020, but technological drawbacks and cybersecurity concerns
tended significantly to obstruct any ambition to attain
fully remote reserve management operations. The paper
carries the names of the authors and should be cited
accordingly. The findings, interpretations, and conclusions
expressed in this paper are entirely those of the authors.
They do not necessarily represent the views of the
International Bank for Reconstruction and Development and
World Bank and its affiliated organizations or those of the
Executive Directors of the World Bank or the governments
they represent. |
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