One-third of central banks plan investment in asset classes, according to BNY Mellon
07 February 2018 New York
Image: Shutterstock
Despite operational headwinds, one-third of central banks plan to invest in new markets and asset classes, according to a new BNY Mellon report.
The report, released on 6 February, found that while one in three central banks say they plan to invest in new markets and asset classes, half the central banks surveyed are planning a technology upgrade to deal with the growing operational pressures faced by the industry.
BNY Mellon also said that in terms of technology “there is both anecdotal and statistical evidence of growing sophistication and innovation by institutions willing and able to invest beyond established parameters”.
It also found that 39 percent of central banks surveyed are investing in equities, while 61 percent said they already participate in repo markets, and 72 percent are already using derivatives as part of their investment management activities.
The report draws upon data from an interview-based survey of central banks from across three continents and was written in collaboration with the University of Cambridge Judge Business School.
Daron Pearce, CEO of asset servicing for Europe, the Middle East and Asia (EMEA) at BNY Mellon, said: “Some central banks are switching from an in-house to third party core system while others are upgrading or improving interfaces between existing platforms. Central banks are also responding to the need to build more robust defences against cybercrime.”
Marvin Vervaart, EMEA asset owner segment head at BNY Mellon, commented: “Like all institutional investors, central banks have had to adapt to a prevailing low-yield environment over the past decade. Disappointing yields from traditional asset classes have led central banks to re-think their investment strategies.”
He added: “A wide range of instruments are being targeted, including equities, corporate bonds and real estate, and in some cases central banks are engaging third-party investment managers rather than their in-house resources.”
The report, released on 6 February, found that while one in three central banks say they plan to invest in new markets and asset classes, half the central banks surveyed are planning a technology upgrade to deal with the growing operational pressures faced by the industry.
BNY Mellon also said that in terms of technology “there is both anecdotal and statistical evidence of growing sophistication and innovation by institutions willing and able to invest beyond established parameters”.
It also found that 39 percent of central banks surveyed are investing in equities, while 61 percent said they already participate in repo markets, and 72 percent are already using derivatives as part of their investment management activities.
The report draws upon data from an interview-based survey of central banks from across three continents and was written in collaboration with the University of Cambridge Judge Business School.
Daron Pearce, CEO of asset servicing for Europe, the Middle East and Asia (EMEA) at BNY Mellon, said: “Some central banks are switching from an in-house to third party core system while others are upgrading or improving interfaces between existing platforms. Central banks are also responding to the need to build more robust defences against cybercrime.”
Marvin Vervaart, EMEA asset owner segment head at BNY Mellon, commented: “Like all institutional investors, central banks have had to adapt to a prevailing low-yield environment over the past decade. Disappointing yields from traditional asset classes have led central banks to re-think their investment strategies.”
He added: “A wide range of instruments are being targeted, including equities, corporate bonds and real estate, and in some cases central banks are engaging third-party investment managers rather than their in-house resources.”
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