27th Annual Reserve Management Seminar Survey

A year on, as we’re starting to look beyond the COVID-19 crisis, how are central banks and sovereign institutions adjusting to meet their long-term goals?

With over 20 years of comprehensive surveys, we believe the Annual Reserve Management Seminar Survey is among the most authoritative depictions of official reserve management activities available. This year's survey was conducted during April – June 2021 and collected responses from close to 30 central banks from all regions globally. Results were presented at the 27th UBS Reserve Management Seminar, held virtually from June 28-July 1.

Selected highlights

  • Macro and Economic concerns: Failure to end the pandemic is the main concern (79%), followed by soaring debt levels (71%) and fear of inflation (57%). Inflation was not mentioned at all in last year survey.
  • Macro and Financial Concerns: Lower/Negative yields in fixed income markets is mentioned by 86% of respondents, inline with the survey results of the last three years. Rising interest rates & inflation is mentioned by 64% of surveyed institutions, a dramatic increase from only 6% in the previous year. 67% of participants expect the US FED to raise interest rates in 2023
  • Strategic Asset Allocation: The “secular” trend towards more diversification of reserves across asset classes has continued during the pandemic. Equities is an eligible asset class for over 40% of central bank and Emerging Market Debt experienced a surge in eligibility (54%). 21% of participant banks consider investing in illiquid asset classes like real estate and infrastructure. A shift towards assets that protect against inflation is also visible in 2021.
  • Currencies: The RMB continues its “marathon” of becoming a key reserve currency with the average long-term target allocation to the Chinese currency increasing to 5.7%. Reduced USD demand during the year and rising demand for euro denominated assets.
  • Sustainability: 19% of participants considered adding sustainability as a fourth reserve management objective. 31% indicated that they have recently moved or considered to move from traditional to ESG benchmarks.
  • Central Bank Digital Currencies: Nearly 40% of respondents expect wholesale CBDC to be launched within the next 3 years. Crime and money laundering prevention and pressure from crypto currencies are mentioned among the key drivers. 71% of respondents prefer a centralized setup instead of a decentralized (DLT) system. More than 60% of respondents do not believe that the launch of CBDC will lead to a diminished role of the USD and more than 50% do not know yet what will be the impact of a digital Yuan on the internationalization of the RMB.

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