Reserve management and the credit crisis

Over the last few years, there has been a general trend for central banks to diversify their assets, shifting some of their reserves away from government debt into higher-yielding asset classes. Between 2004 and mid-2007, financial markets were benign and many of the new investment vehicles made a positive contribution to the performance of central bank reserves. However, the current market disruptions changed this environment radically and resulted in some challenges for reserve management. The