Session 3: Challenges Facing Central Bank Reserves Managers

Reserve managers continue to face a difficult investment environment with sustained low and in some cases, negative interest rates in developed economies along with volatile exchange rates. Market performance has been polarized with a flight to quality and even to cash. In a climate of longer and slower recovery to global growth due to the ongoing impact of the pandemic along with continuation of QE and fiscal stimulus, how should reserve managers invest and how should they unwind holdings of government bonds when the opportunity is presented? Within this context, central banks and sovereign debt managers are becoming more conscious of the effects of their economic footprint and of the benefits of integrating sustainability, mainly by adding environmental, social, and governance (ESG) considerations into investment decisions.

Reserve managers have to decide: which currencies, which markets and products are performing best, and which have underperformed? What is the outlook for gold and alternative asset classes? What has been the drawdown on liquidity and long-term reserves as a consequence of the pandemic? Has the needle moved between the importance of liquidity vs returns? In this session, reserve managers and experts share their insights and experiences in managing central bank reserves within the context of a post-pandemic environment and large holdings of local currency government securities.

Speakers:
Dr. Timbul Budi Santoso, Head of Division-Review & Policy Recommendation, Foreign Exchange Reserves Department, Bank Indonesia
Mr. Seok Jun Yang, Director General, Reserve Management Group, Bank of Korea (TBC)
Mr. Andrew Wold, Global Head of Official Institution Client Strategy, State Street Global Advisors

Moderator: Mr. Raphael Bellan-Peyrault, Assistant Treasurer, ADB