Monetary policy and reserves management in an era
of uncertainty
Panellists at the Central Banking Summer Meetings with experience of ‘polycrises’ discussed reserves management strategies to prepare for and respond to financially turbulent times.
The world order is evolving and geopolitical risks are heightened. Geoeconomic fragmentation is a real concern for reserve managers.
As well as capital outflows and foreign exchange volatility, they must contend with complex monetary policy and balance sheet dynamics. The scale of central banks’ asset purchases since 2019, meanwhile, intensified links between fiscal and monetary policies.
Central Banking analysis shows renminbi holdings in FX reserves had been steadily growing until Russia’s invasion of Ukraine. However, it is since the global financial crisis that began in 2007–08 that China has purchased around half of its gold and Russia more than 80%.
As a result, this in-depth report presents short-term and long-term geoeconomic analysis to inform reserve managers’ strategic asset allocations.
Digital multilateral FX solutions are poised to play an important role in FX reserve currency composition.
Though the system of international co-operation is under strain, nevertheless, officials from the Brics Contingent Reserve Arrangement and the International Monetary Fund are among those due to meet at the 10th Regional Financing Arrangements dialogue next year.
Geoeconomic
reserve management
Panel
discussion
Geoeconomic reserve management
For enquires and information regarding Central Banking focus reports, contact:
Sarah Banks, Commercial director: Central Banking
+ 44 (0)20 7316 9525
sarah.banks@infopro-digital.com
Geoeconomic
reserve management
Invesco’s Arnab Das draws on macro history to try to put the present in perspective and navigate the future.
The long and short of it:
from ‘new normal’ to ‘old ordinary’
Thought leadership
A survey of 24 institutions, conducted by Central Banking, delved into global geopolitical risks and their significance for central bank balance sheets and foreign exchange reserves. Reserve managers identified the US elections as critical. US foreign policy will shape the trajectory of conflicts, with consequences for oil prices, supply chains and global inflation.
Geopolitical risks to reserve adequacy:
2024 survey
Higher interest rates are putting pressure on central bank profits and may increase supply of government debt, especially during quantitative tightening. Will central banks be required to issue bonds?
US debt sustainability and central bank balance sheet dynamics
Balance sheet dynamics
Restrictive covenants in the global financial safety net system drive fragmentation, while central bank digital currencies and a digital petroyuan may ultimately alter FX reserve investments.
Foreign policy impact on future FX reserves composition
Currency composition
Thought leadership
Survey
analysis
Monetary policy
Currency composition
Panel
discussion
Survey
analysis
Monetary policy
and reserve management in an era of uncertainty
A survey of 24 institutions, conducted by
Central Banking, delved into global geopolitical risks and their significance for central bank balance sheets and FX reserves. Reserve managers identified the US elections as critical. US foreign policy will shape the trajectory of conflicts, with consequences for oil prices, supply chains and global inflation.
Survey analysis
Geopolitical risks to reserve adequacy: 2024 survey
Headline
headline
Sarah Banks, Commercial director – Central Banking
+ 44 (0)20 7316 9525
sarah.banks@infopro-digital.com