Central Banks Take On More Risk

“Central bankers have diversified into riskier assets, such as equities and lower-rated government bonds, a new survey shows.

Central bankers around the world have traditionally put their reserves in U.S. Treasurys and government bonds of the safest European countries, but they’re expanding into currencies like the Australian and Canadian dollar, Scandinavian currencies and the Chinese renminbi, according to the survey by Central Banking Publications, a trade journal, and the Royal Bank of Scotland, the Financial Times reports.

Approximately 80 percent of the 60 central bankers polled said they have purchased or would consider purchasing Australian or Canadian dollars. Over 40 percent have already purchased or would consider the renminbi, about half have invested in or were considering Scandinavian currencies and the New Zealand dollar and 14 percent have bought or were considering the Brazilian real.

What’s more, 30 percent said they might invest in equities, according to the Times.

The central bankers participating in the survey, largely based in Asia and the Middle East, oversee $6.7 trillion.

The central bankers say current low yields of traditional assets and the falling dollar and euro have prompted them into riskier assets, the Times notes. Over four-fifths of the central bankers polled point to the aggressive monetary easing of the European Central Bank and the Federal Reserve is encouraging them to explore different currencies.

In an attempt to revive their economies, the Fed and other major central banks have set interest rates at record-low levels and pushed down the value of their currencies to try to increase exports. …”

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