Luigi Federico Signorini: Sustainable investment in uncertain times - the future of public sector asset management

Speech by Mr Luigi Federico Signorini, Deputy Governor of the Bank of Italy, at the OMFIF Roundtable for Public Sector Asset Managers, London, 6 February 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

In these remarks, I shall take the point of view of the central bank as an investor, rather than a monetary policy authority. My contribution may thus be seen as complementary to those of other speakers in this session. While profit maximising is not their ultimate objective, central banks do manage substantial funds and have a duty to manage them well, within the limits and for the purpose dictated by their institutional function.

In the last few years, the investment profile of central banks has changed significantly because of the substantial expansion of their balance sheets, which in turn was due to the unprecedented scale and non-standard nature of monetary policy actions. As a result, the risks borne by central banks have increased, both quantitatively and qualitatively. Many central banks have begun, or returned to, dealing with less traditional assets, markets and counterparties.

This development has raised the profile of asset (and liability) management within central banks, and it has arguably made the management of official reserves and own funds more similar to that of diversified private funds, with a greater focus on controlling risks and enhancing returns.