Template-Type: ReDIF-Paper 1.0
Author-Name: Ingo Fender
Author-X-Name-First: Ingo
Author-X-Name-Last: Fender
Author-Name: Mike McMorrow
Author-X-Name-First: Mike
Author-X-Name-Last: McMorrow
Author-Name: Vahe Sahakyan
Author-X-Name-First: Vahe
Author-X-Name-Last: Sahakyan
Author-Name: Omar Zulaica
Author-X-Name-First: Omar
Author-X-Name-Last: Zulaica
Title: Reserve management and sustainability: the case for green bonds?
Abstract: Central banks' frameworks for managing foreign reserves have traditionally balanced a triad of objectives: liquidity, safety and return. Pursuing these objectives involves explicit trade-offs. More of an emphasis on returns, for instance, may require central banks to sacrifice some of the safety and liquidity of their overall holdings. Most recently, central banks have shown significant interest in incorporating environmental sustainability considerations into their policy frameworks, including their reserve management. This paper first explores whether sustainability considerations would support a tetrad of reserve management objectives, by drawing on the results of a recent BIS Survey on Reserve Management and Sustainability. It then illustrates how central banks might analyse (and weigh) all four objectives in allocating part of their foreign exchange reserves to green bonds using currently available market data.
Length: 23 pages
Creation-Date: 2020-03
File-URL: https://www.bis.org/publ/work849.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work849.htm
File-Format: text/html
Number: 849
Classification-JEL: E58, F31, G11, G17
Keywords: central banks, green bonds, reserve management, sustainability
Handle: RePEc:bis:biswps:849