Central banks shift focus from liquidity to returns in reserve management.
Central banks around the world are managing their reserves in new ways, focusing on balancing liquidity and return on investments. Researchers discuss the size of reserves, the benefits and costs, and the implications for central bank balance sheets. They explore different approaches to reserve management, such as assessing reserve adequacy and asset allocation. Key findings include the importance of balancing return and liquidity, the impact of reserve accumulation on volatility, and the need for effective risk management strategies.