Management of Investment Assets

About

The Central Bank of Ireland (the Bank) currently holds circa €18 billion of investment assets:    

  • Comprised mostly of euro-denominated assets
  • Held in two portfolios:
  1. Hold to Maturity (HTM)
  2. Marked to Market (MTM)

 

Why does the Central Bank hold Investment Assets?

Pre-Euro Introduction:

Prior to the introduction of the euro, the Central Bank traditionally held reserves mainly to defend the currency against speculators

  • For example, if there was a lot of selling of the Irish punt in the market, such that its value relative to other currencies dropped, the Bank would use its foreign currency reserves to buy punt, and help preserve the punt’s value
  • The Central Bank also held reserves to provide income for the Bank to maintain its independence

Post-Euro Introduction:

  • In the single currency era, the role of reserves has changed
  • The ECB now holds a foreign currency portfolio of about €68bn in size, to which we contributed a portion (circa 2%) upon the establishment of EMU
  • This portfolio is managed across the euro area, with Ireland’s portion managed by FMD
  • This is available to the Eurosystem should the need arise to intervene in the foreign exchange market.