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.

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. 

Assets in gold

  • The Central Bank holds a small portion of its assets in gold. Gold holdings were valued at €0.19 billion at end-2014. The Central Bank did not purchase or sell any gold during 2014.