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
• Deposits
• Repurchase and Reverse Repurchase agreements
• Other money market instruments
• Futures.

Currency composition of Investment Assets

• Historically, the investment portfolio was composed of euro and non-euro denominated investments.
• The Central Bank’s investment portfolio is currently mostly denominated in euro.

Risk

• 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 Central Bank manages its MTM investment assets by reference to benchmark portfolios created by Merrill Lynch.
• These benchmark portfolios incorporate the Central Bank’s preferences for liquidity, risk and return.

Sustainable Investment

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. 

Investment Desk

• 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.