Reserve Management in Emerging Market Economies: Trends and Challenges

11 Pages Posted: 13 Dec 2019

See all articles by Jochen F. Schanz

Jochen F. Schanz

Bank for International Settlements (BIS)

Date Written: October 31, 2019


Foreign exchange (FX) reserves are an integral part of emerging market (EME) central banks’ policy toolkit. They insure against shocks and complement monetary policy to achieve price and financial stability. But building and holding FX reserves is costly. Drawing on a recent survey of 21 EME central banks and their contributions published in this volume, this paper highlights that most have gradually broadened the range of assets and currencies in their reserve portfolios, to diversify and to raise their portfolios’ return. Exposure to credit risk remains very low, and risk-sharing arrangements with the Treasury reduce some central banks’ exposure to market and exchange rate risk. While the US dollar dominates most portfolios, the currency composition also shows strong regional patterns.

Full Publication: Reserve Management and FX Intervention

Keywords: Foreign exchange reserves, central bank balance sheets, emerging market economies

JEL Classification: F31, E58, G11

Suggested Citation

Schanz, Jochen F., Reserve Management in Emerging Market Economies: Trends and Challenges (October 31, 2019). BIS Paper No. 104c, Available at SSRN:

Jochen F. Schanz (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002

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