Inaugural RAMP Survey on the Reserve Management Practices of Central Banks

Abstract

In the spring of 2018, the World Bank Treasury's Reserves Advisory and Management Program (RAMP) concluded its inaugural survey on central banks' reserve management practices. RAMP sought to assess whether there had been a significant evolution in this activity over the past two decades given:

1. The substantial increase in global foreign exchange reserves over that time period; and 2. The extraordinary policy responses to the unprecedented macroeconomic and investment environment during and after the global financial crisis.

The survey results show that most central banks continue to employ a traditional approach: their reserve holdings are concentrated in high-quality fixed-income assets, and the minimum credit rating for their investments remains conservative. At the same time, the data suggest important changes are under way as a material number of central banks reported more diversified portfolios with exposure to nontraditional asset classes: a third of respondents hold corporate credit, most of which are investment grade, and almost one in five own mortgage-backed securities or equities, although mostly in limited allocations. Our analysis of this information did not find a relationship between respondents' measures of reserve adequacy and the size of their exposure to nontraditional asset classes. The data do show considerable cross-country differences in the way central banks manage their reserves and, in some circumstances, our analysis suggests these differences correlate with respondents' country income groups.