Should central banks review their investment guidelines as monetary policy normalises?

A normalisation of monetary policy at developed world central banks poses significant opportunities and challenges for central bank reserve managers.

Charles Goodhart, a former member of the Bank of England’s Monetary Policy Committee and professor of Economics at the London School of Economics; Tim Young, a former reserve management official at the Bank of England official and lecturer in finance and economics at the University of York; and Scott Dickinson, head of the Middle East, South Africa and sovereign wealth at BNP Paribas Securities Services, debated the matter during an April 17, 2014 Central Banking On Air debate.

Key questions discussed included:
● Why are investment guidelines important?
● What are the key considerations when reviewing reserves policy?
● How can central banks develop sound processes and oversight?
● What asset classes and instruments should be eligible?
● Is transparency an important part of the process?
● Which central banks are setting the standard?

 

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