Official reserve management in the 21st century

May 5, 2018
By Terrence Keeley

A lack of operational clarity and reluctance to view reserve portfolios holistically have prevented optimal, rules-based approaches to reserve management becoming commonplace.

Subject to strict liquidity and volatility constraints, foreign exchange reserves are to be managed against viable, risk-aware return objectives. In actual practice, however, this deceptively simple paradigm has proven difficult to implement. Three reasons explain this:

  • A lack of operational clarity about objectives
  • A failure to view reserve portfolios holistically
  • Forex reserve volumes

BlackRock’s Terrence Keeley, Stuart Jarvis and Michael Palframan explain how to promote optimally by observing the right principles.

Terrence Keeley
Global Head of the Official Institutions Group (OIG)
Stuart Jarvis
Managing Director, Portfolio Construction Research team within the BlackRock Investment Institute (BII)
Michael Palframan
Vice President, Portfolio Research Group within BlackRock Investment Institute (BII)