The official site of Italy's central bank

The ECB reserves

In addition to its own reserves, the Bank of Italy also manages a share of the ECB’s reserves, following guidelines set by the Governing Council. A partly decentralised approach is adopted for the management of ECB reserves, with a few functions, such as risk management and accounting, being performed directly by the ECB, and investment and back office functions attributed to the single NCBs within the above guidelines. These guidelines translate the general objectives of reserve management into precise rules, including lists of eligible issuers and counterparties and a set of limits for credit and market risk.

The main objective of ECB reserve management is to ensure that a sufficient amount of liquid resources are available, whenever needed for foreign exchange policy operations. In the event of large-scale intervention, the ECB may make further calls on foreign reserves or fund the intervention without using its foreign exchange holdings (for instance by means of foreign exchange swaps). Subject to the stringent security and liquidity requirements implicit in the purpose of the portfolio, ECB reserves can also be managed to maximise return.

An important principle of reserve management, of both ECB and national reserves, is that of ‘market neutrality’. This means that investments should be made in markets that are sufficiently deep and liquid to ensure that transactions are easily absorbed at market-determined prices.

• Link to ECB website