Central bank investment trends 2020
Continuity and change in the Covid-19 pandemic
Central bank investment trends 2020 - Continuity and change in the Covid-19 pandemic
Each year, in association with Central Banking Publications, HSBC produces the Reserves Management Trends Survey (RMT). The RMT is acknowledged as the industry standard among practitioners and the stakeholder community. This year’s survey saw participation by 74 central banks, responsible for managing 46 per cent of global reserves, who make up a representative sample of reserves managers by size and by regional geography.
We have summarised its results for a wider audience and supplemented the data with comments based on conversations with monetary and financial policymakers, as well as reserves managers, from the central bank community. The RMT forms one of the major components of HSBC’s Annual Sovereign Investor Forum, and our commentary here incorporates insights shared by senior central bankers in panel discussions on the various challenges and initiatives on the agendas of reserves managers.
- Low expected returns on traditional reserve assets and currencies continue to fuel a drive to diversify into higher yielding fixed income assets and to some extent into equities
- More central banks are investing in RMB, and it continues to be expected to grow over the next decade into a significant reserve currency
- Even before the Covid crisis, reserves managers were making steady progress in incorporating ESG considerations into their investment processes, not least as part of the rapid growth of the central bank-led Network for Greening the Financial System. In that sense, as investors as well as policymakers, central banks are at the forefront of the major items on the agenda that will affect us all for years to come