Central Bank’s Investment Assets
Management of the Investment Portfolios
The parameters within which the investment portfolios are managed are determined by the Commission of the Central Bank. These include:
- Approved investment instruments
- Currency composition of Investment Assets
- Level of risk considered appropriate for investment activities.
Approved Investment Instruments:
- Government bonds and other high-quality fixed income securities
- Repurchase and Reverse Repurchase agreements
- Other money market instruments
Currency composition of Investment Assets
- Historically, the investment portfolio was composed of euro and non-euro denominated investments.
- The Bank’s investment portfolio is currently mostly denominated in euro.
- The portfolio is managed by reference to a benchmark portfolio in order to maximise the returns, subject to liquidity and security considerations approved by the Commission.
- The Bank manages its MTM investment assets by reference to benchmark portfolios created by Merrill Lynch.
- These benchmark portfolios incorporate the Bank’s preferences for liquidity, risk and return.
System of controls, limits and procedures:
The Commission Risk Committee (CRC)
- Reviews investment policy and performance.
The Executive Risk Committee (ERC)
- Considers policy issues and strategy relating to the investment portfolio.
- Is under the chairmanship of the Deputy Governor (Central Banking), includes senior staff of Financial Markets (FMD), Financial Control (FCPD) and the Organisational Risk Divisions (ORD).
An Investment Assets Committee
- Chaired by the Director of Financial Operations.
- Comprises management and senior staff of the Financial Markets and Payments and Securities Settlements Divisions (PSSD).
- Meets monthly to review investment performance and short-term policy.
A Standing Investments Committee
- Comprises management, senior dealers and senior analysts of FMD, together with a representative from ORD.
- Meets weekly to formulate short-term policy.
- Carries out the day-to-day dealing activities that are required to implement decisions and to ensure that our investment assets are fully invested.
Organisational Risk Division
- Carry out risk monitoring and performance measurement, independently of the Financial Markets Division.
Assets in gold
- The Bank holds a small portion of its assets in gold. Gold holdings were valued at €0.19 billion at end-2014. The Bank did not purchase or sell any gold during 2014.