Allocation of NBP reserves and liberalization of financial flows in the 1980s and 1990s. [materiał partnera]

The reserve assets of the National Bank of Poland will increase
The reserve assets of the National Bank of Poland will grow and in fact in euros they will approach 200 billion dollars, in dollars they have already exceeded this limit and the last item we reported was 214 billion dollars. We try to manage this, of course. Central banks operate in such a decision-making triangle, which means they must maintain the liquidity of assets as well as the credibility and stability of these securities and maximize the rate of return. These are the three objectives. We are trying to achieve these three objectives at the same time.

NBP to increase its involvement in corporate bond market and equity market

In recent years, some of our activities have even been noticed by experts and markets. Some time ago, we introduced a portfolio of held-to-maturity bonds, i.e. the so-called HTM portfolio – not actively managed, but after purchase it is held until redemption – it recently represents about 8% of our portfolio. We systematically buy gold bars, but this is a topic already known to the public – discussed many times – and recently we decided to increase our involvement in the corporate bond market and the stock market. And this is interesting because – I mentioned these three objectives when managing reserves – the most reliable and stable are the bonds of the largest countries and the largest economies, but in their case there are problems in achieving the third objective, i.e. profitability, because the most credible the issuer – be it the largest European economies, in this case we always talk first about Scandinavia, Germany, France and Benelux, or in the case of the United States – can earn a little less on these bonds than on more risky countries with bonds that are not so well perceived. But we do not want to go in this direction because we are a central bank and not an investment fund. Therefore, credibility, stability and security of investments are the basic and fundamental objectives. That is why we have decided to take a different approach, namely to increase our involvement in the corporate bond and equity markets.

NBP to invest in stocks through ETFs

We do not invest in bonds that would have a weak rating and, above all, we prefer to invest through funds, through ETFs, which means that we buy a cross-section of the entire corporate bond market in the United States and Europe. In Europe, of course, it is shallower, there is simply not as much paper, there is a different culture of financing industrial projects. Of course, the American market is more developed. We buy the entire cross-section of the market through ETFs. […] Because we invest foreign reserves, the World Bank and IMF rules on investing in reserve assets state that they do not include investments in the domestic market. That is out of the question. So these are foreign securities. And such a cross-section of the entire market means that the turbulence related to a specific company is basically not felt. This means that we somehow achieve this higher profitability by minimizing the risk of a particular issuer.

NBP buys indices through ETFs

We simply buy the index through ETFs and this applies to the European, British and American markets. So these are our assets. […] We have decided that in this medium-term perspective we will increase our involvement in the bond market. [korporacyjnych] up to 5% of our reserves and in the case of shares via ETFs up to 15%, but this will not be done instantly, calmly, step by step. We will report on this in the coming months.

The full conversation is available on the channel How does NBP manage reservations? (youtube.com)