External managers hired to set up new asset classes and train staff
Central banks also look to external managers to boost returns and access market intelligence
Reserve managers outsource functions for a variety of reasons, especially the development of investments in new asset classes and staff training, the Reserve Benchmarks 2023 find.
The adoption of new asset classes and staff training are the two main goals, both reported by 39 (83%) of 47 central banks as reasons for their work with external asset managers. In the 2022 benchmark, respondents selected both objectives at the slightly lower rate of 76.5%.
The least-reported reasons respondents
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More on Reserves
Fewer central banks added new reserve assets in 2023
Overall, 10.3% of institutions diversified their asset allocation, down from 18.6% last year
Wallstreet and others rank highest for reserves technology services
Ion’s Wallstreet treasury system tops the 2023 rankings
Reserve managers rank JP Morgan top for custody and banking
BlackRock preferred for knowledge transfer and capacity building
Reserve managers vote BlackRock as overall best asset manager
Goldman Sachs and “other” asset management firms also score highly
High income countries less likely to tranche reserves
Overall, 72.4% of central banks divide their portfolios into liquidity and investment sections
Fewer than half of reserve managers perform liquidity stress tests
Approach tends to be more common among African and American institutions
FX reserves commonly invested in US Treasuries, bank deposits
SIBs and EU NextGeneration fund trail behind, as reserve managers avoid infrastructure and crypto
Few central banks expanded existing swap lines over the past year
Nearly one-third of new and existing lines are denominated in US dollars