Trends & Outlook for the future from BNY Mellon
In broad terms, our research reveals a gradual but definite expansion of investment and trading activities by central banks beyond traditional boundaries, which is putting pressure on existing operational infrastructure and driving demand for third-party solutions and services.
Like all institutional investors, central banks have had to adapt to a prevailing low-yield investment environment over the past decade or so. Slow, fragile recoveries in developed economies and high levels of market volatility and political risk have combined to keep interest rates and investment returns at low levels. Disappointing yields from traditional asset classes have led many central banks to re-think their investment strategies.
This has taken a number of different forms, reflecting the diversity of approaches, priorities and mandate constraints across the central banking spectrum, including investment in a wider range of asset classes, currencies, and instruments, as well as the increased use of external managers. The tactics selected might be different, but the overall trend is clear: innovation in search of yield.