Challenges and opportunities for central banks

Massimiliano Castelli, head of strategy for global sovereign markets says climate risk is top of the central banks’ agenda and expects more action from these institutions on this topic in the future.

30 Jun 2019

Challenges for central banks

  • fear of a slow down and return to a deflationary trend as most of their assets are in fixed income; low or negative yield challenge to good returns
  • Climate risk is top of the agenda for central banks but challenges relate to mandate, lack of data and benchmark issues

Key developments in central banks allocation:

  • Diversification away from government bonds; ~40% of those survey are invested in listed equities (all time high)
  • Steady rise of RMB to reserve currency status

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