Management of Investment Assets

About

The Central Bank of Ireland currently holds circa €17 billion of investment assets at end of 2023:

• In line with its Eurosystem central banking peer group the Central Bank of Ireland holds a portfolio of investment assets dominated by investments in traditional financial assets such as fixed income securities, together with smaller holdings in other approved asset classes, including equities and gold. 

• The Central Bank also manages a share of the ECB’s US dollar reserve assets. 

Why does the Central Bank hold Investment Assets?

Pre-Euro Introduction:

Prior to the introduction of the euro, the Central Bank traditionally held reserves mainly to defend the currency against speculators

• For example, if there was a lot of selling of the Irish punt in the market, such that its value relative to other currencies dropped, the Central Bank would use its foreign currency reserves to buy punt, and help preserve the punt’s value

• The Central Bank also held reserves to provide income for the Central Bank to maintain its independence

Post-Euro Introduction:

• In the single currency era, the role of reserves has changed
• The ECB now holds a foreign currency portfolio of about €55bn in size, to which we contributed a portion (circa 2%) upon the establishment of EMU
• This portfolio is managed across the euro area, with Ireland’s portion managed by FMD
• This is available to the Eurosystem should the need arise to intervene in the foreign exchange market.

Separate from this, the Bank’s own investment assets contribute to maintaining its financial independence in respect of operating costs, alongside other income streams such as the regulatory levy and income derived from monetary policy implementation.