- October 1, 2019
- Posted by: admin
- Category: Current News
After the coordinated interventions of monetary easing by major Central banks, many
sovereign investment institutions faced pressure to support the return objective
alongside the primary objectives of maintaining the principal safely and being able to
access it easily in liquid markets whenever necessary. The IMF revised guidelines for
foreign exchange reserves management observe that “The management of credit risk
should aim at not relying solely and automatically on the assessment of credit rating
agencies”. The guidelines further note that Reserve Managers may “put in place
internal credit risk assessment systems for assessing and monitoring their
counterparties—both sovereign and non-sovereign. Reserve Managers may also have
a system of assessing credit risk arising from the various instruments in which they
invest”. The BIS Committee on the Global Financial System (CGFS) also observed
that credit rating information should support, not replace, investor due diligence
process.
The MEFMI Secretariat explored ways of supporting member countries in this process
and developed the Internal Credit Risk Analysis Tool (ICRAT). This tool was piloted
starting 2018. Alongside these interventions, the Financial Sector Management
Programme also supported countries with periodic review of their strategic asset
allocation.
The focus of the retreat therefore, was to recap on the rationale for review of asset
allocation as well as following up on the lessons learnt from the ICRAT
implementation so far.
The theme of the event was trends in sovereign reserves management. The event was
attended by 23 delegates.