For immediate release: Monday, April 14, 2025

Central banks rank US protectionist policies main risk in 2025

• Inflation and interest rates were the most important factors that central bank officials said would affect their reserve management over the next five years. On average, reserve managers expected interest rate divergence between the US and the eurozone to be around 175 basis points at the end of 2025.
• The HSBC-sponsored Central Banking survey of 91 central banks managing more than $7 trillion in foreign exchange assets also found 42 central banks conducted FX interventions over the past 12 months.
• No central banks invested in or were considering bitcoin as a suitable reserve asset, but a minority believed cryptocurrencies were becoming more credible overall as an asset class. A majority were against bitcoin reserve fund proposals, but almost 40% were unsure on this topic.

US protectionist policies, geopolitics and diversification

US protectionist policies were the most significant risk that reserve managers said they faced in 2025. The survey took place this year before the April 2nd announcements. Nevertheless, of the 88 central banks responding to this part of the question, 39 (44.3%) voted it their most pressing concern. When combined with those who ranked geopolitical escalation first, this increased to 56 (62.9% of 89 respondents).

Seventy-five percent of reserve managers said they now incorporated geopolitical risk in their decision-making, and over two-thirds of these had made changes as a result of this in the last 12 months: 45 out of 62 (72.6%) – up from 30 out of 56 (53.6%) last year. The most common change was to bond issuers invested in (25, or 45.5%), followed by counterparties (21, or 38.9%) and currencies invested in (17, or 30.9%).

With respect to gold, 37.5% (or 27 out of 72 central banks) planned to increase their allocation. None planned to decrease their allocation. The main benefits of holding gold were cited as portfolio diversification, long-term store of value and performance during periods of crisis.

This year, the survey also asked how reserve managers expected to position their portfolios over the next 12 months. Forty-three central banks out of 84 said they intended to increase their asset class diversification (51.2%), and around one-third said they anticipated increasing liquidity (29, or 34.9%) and duration (29, or 34.1%) respectively. (Percentages differ because not all reserve managers answered every part of the question.)

Expecting higher levels compared with the pre-pandemic era, ‘inflation and interest rates’ were far and away the most important factor that central bank officials said would affect their reserve management over the next five years. Of 89 respondents to this question, 68 (76.4%) ranked it highest. “While higher rates make entry points in fixed-income assets more attractive in general, they also pose challenges for managing existing portfolios due to the price impact on duration assets,” said a reserve manager of a central bank in Africa. Geopolitics and the US dollar exchange rate were the factors that came second (41, or 46.1%) and third (33, or 37.1%) respectively.

Interest rate divergence

Eighty-two reserve managers projected the US Federal Reserve’s interest rates to be between 3.0% and 4.5% (average: 3.89%) by the end of this year. In contrast, 79 reserve managers anticipated the European Central Bank would set interest rates somewhere between 1.5% and 3.25% (average: 2.13%). On average, reserve managers expected interest rate divergence between the US and the eurozone to just exceed 175 basis points at the end of 2025, although this expands to 300bp taking minimum and maximum projections into account. Eurozone central banks tended to expect the Fed’s rate to be higher and the ECB’s lower than did central banks in other regions.

FX intervention

Half (42, or 50.0%) of 84 central banks said they had intervened in FX markets in the last 12 months. Central banks often do not publicly announce FX interventions – rendering them both at once an important and underreported tool.

Removing eurozone central banks from the analysis, the proportion of central banks that had intervened in FX markets in the last 12 months rose to 42 out of 69 central banks (60.9%).

Maintaining investor confidence in the country (28, or 60.9%) and reserves acting as a buffer for possible FX intervention (27, or 58.7%) were the most common reasons why 46 central banks were aiming to increase their reserves in 2025.

Bitcoin and stablecoins

No central banks reported making investments in stablecoins and cryptocurrencies. At the same time, although at the moment no central banks thought bitcoin should be considered a suitable asset class for reserves, 20 (23.0%) central banks out of 87 said they were unsure. Ten (11.6%) out of 86 central banks said cryptocurrencies were becoming more credible generally as an asset class. Two central banks said they would consider investing in cryptocurrencies and stablecoins in five to 10 years’ time.

Although most central banks were against a strategic bitcoin reserve fund (50, or 59.5%), a significant number (33, or 39.3%) were unsure. Just one central bank (1.2%) was in favour of a bitcoin strategic reserve fund.

The survey is the first chapter in the new book HSBC Reserve Management Trends 2025, which is published by Central Banking Publications and sponsored by HSBC. It is the 21^st edition in a series of annual reviews of reserve management. The survey was carried out between January and March 2025. In total, 91 reserve managers, responsible for over $7 trillion in reserves, participated.

Commenting on the survey, Bernard Altschuler, Global Head of Central Bank Coverage at HSBC, said: “The heightened uncertainty around tariffs, geopolitical developments and the path of interest rates is a key theme of this year’s survey. Reserve managers are adjusting, with 50% expecting their reserve levels to rise in 2025, a significantly increased number compared with last year have made changes in response to geopolitical risk, and 37.5% were anticipating increasing their gold allocation this year.”

Media copy of the survey chapter – available on request

For more information, contact Joasia E. Popowicz, Editor: +44 20 7316 9133; ;j.e.popowicz@centralbanking.com

For HSBC enquiries, contact Charlotte Parker, Media Relations: charlotte.parker@hsbc.com

Notes for Editors

1. For details of survey respondents, see the ‘Profile of respondents’ section, near the start of the survey chapter.
2. The full print edition of HSBC Reserve Management Trends 2025, sponsored by HSBC, will be published on May 2, 2025, by Central Banking Publications.
3. Central Banking Publications, a division of Infopro Digital, is dedicated to the reporting and analysis of central banks and international financial institutions. Since its foundation in 1990, Central Banking journal has been the only regular, independent publication for and about central banks. It is supported by an Editorial Advisory Board that includes the former governors of many of the world’s leading central banks, as well as Nobel Prize-winning economists. Central Banking also operates the Central Banking Institute, a membership club for central banks comprising Benchmarking, Insight and Professional Development. Central Banking is read by subscribers in more than 140 countries. See centralbanking.com for more details.