Reserve management in a volatile world
OMFIF’s Global Public Investor has tracked central bank reserve managers’ investment strategies since its inception in 2014. In the first edition of the report, we wrote ‘diversification into different sectoral and geographical categories is increasing’ owing to ‘sub-optimal returns from traditional currencies and instruments’ in a low interest rate environment.
Over a decade later, this year’s GPI report shows the appetite for diversification continues. But for very different reasons. The foundations of the global economic order, underpinned by globalisation and the US dollar, are shaking.
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Key findings:
- 90 official institutions surveyed for the GPI 2025 report, comprising 75 central banks and 15 public pension and sovereign funds, with more than $7tn in assets combined.
- 31% of reserve managers up from just 4% last year now cite geopolitics as the top factor shaping investment decisions, with 96% of central banks flagging tariffs and trade protection as the main concern.
- While 70% of central banks are increasingly worried about the US political environment, over 80% still see the dollar as offering safety and liquidity, pointing to gradual diversification rather than rapid de-dollarisation.
- A net 16% of central banks plan to raise euro holdings – more than for any other currency while Germany ranks as the most attractive developed market among public funds.
- 32% of central banks expect to increase gold holdings in the next 12–24 months, with over 20% forecasting the price to surpass $3,500 per ounce.
- A net 28% of reserve managers aim to raise allocations to government bonds, while public funds are holding steady across asset classes amid ongoing market uncertainty.
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