Benchmarking
Only 25% of central banks operate own printworks
Larger central banks from high income countries are more likely to print notes in-house
Central banks show wide variation in cash department staffing
Different staffing levels driven in part by which institutions run their own printworks
‘Wear and tear’ the main reason for banknote exchange
Covid-19 raised fears of banknote contamination, but historical exchange is mostly due to worn notes
Reserve Benchmarks 2020 – presentation
Central Banking’s reserves subject matter specialist Victor Mendez-Barreira speaks with Chris Jeffery about tranching trends, euro stutters, climate and ESG, external managers, liquidity stress tests and coverage ratios
Counterfeits rise with issuance on multiple substrates
Average percentage of counterfeits per total volume in circulation is around 0.01%
Reserve Benchmarks 2020 report – charting new data frontiers
Perspectives on staffing and salaries, reserve coverage, portfolio construction, benchmarking, use of external parties and risk management
Spread gap between green and grey bonds closing – BIS specialist
Measuring and incorporating sustainability still a challenge, says Omar Zulaica
One third of reserves staff work in front-office roles
Average reserve management team size is less than 30 employees
Boards are the main authority for benchmark approvals
Risk management teams tend to lead effort to propose new benchmarks
EM reserves ‘crucial’ in mitigating Covid-19 outflows, says Mauritius governor
Foreign exchange buffers helped to mitigate volatility in financial markets
Lower-income countries generate highest reserves growth
Most reserves portfolios appear to have weathered the Covid-19 crisis well
Few central banks consider climate risk within benchmarks
Despite central banks supporting mandatory climate risk disclosures, very few account for it in their benchmarks
Half of reserve managers use bespoke index benchmarks
Those using external managers can choose bespoke, but public indexes remain predominant
Euro failing to challenge US dollar in global reserves – CBI Benchmarks data
Among non-European central banks euro sovereign debt accounts for just 4.1% of reserves; negative rates act as a major barrier, say reserve managers
Asia tops rankings for reserves coverage ratios
Asia leads across three main metrics, but the region may be moderating its holdings
Europe leads on reserve manager salaries
Central banks pay a wide range of salaries to their reserve managers
Many Paris Agreement signatories do not use ESG screens
Most reserve managers fail to take environmental factors into account for FX portfolios
Emerging markets act as standard bearers for tranching
Nearly two-thirds of reserve managers tranche; largest allocations made to investment tranche
Lower-income nations invest more with external managers
Third-party institutions offer staff training and new asset class investments
Collateral posting spreads among swaps users
Following the Bank of England’s example, most derivatives users now have two-way CSAs
Some large reserve managers eschew liquidity stress tests
Majority of central banks test for thin trading, but three in 10 larger managers do not