Foreign currency reserves

Foreign currency reserves are financial assets denominated in currencies other than the euro. Under Article 127 of the Treaty on the functioning of the EU, Banca d'Italia holds and manages Italy's foreign currency reserves, which, together with those of the ECB and other NCBs, are an integral part of the Eurosystem's reserves.

Data on the size and composition of these reserves are published annually in Banca d'Italia's Annual Accounts.

National reserves

The importance of the national reserves is primarily linked to the possibility that the ECB may request additional foreign currency reserves (Article 30 of the ESCB Statute). They also help to support and strengthen the credibility of the ESCB, maintain trust in the financial system and a country's financial stability, and fulfil commitments towards international financial institutions such as the International Monetary Fund.

Banca d'Italia manages the reserves, which are primarily invested in bonds issued by government and supranational entities; the main objectives are to preserve the value and liquidity of the reserves. Additionally, in compliance with the risk control framework and sustainability considerations, the Bank pursues a return objective.

The results of the foreign currency reserves management contribute to safeguarding the Bank's financial soundness against the risks deriving from its institutional activities.

ECB reserves

Banca d'Italia, like other NCBs, manages part of the ECB's foreign currency reserves under a partially decentralized approach: investment activity, transaction matching and settlement are carried out by individual NCBs, while risk control and accounting are handled directly by the ECB.

The main objective of managing ECB reserves is to ensure the availability of the liquid resources needed for potential foreign exchange market interventions.

Detailed information on the ECB's management of reserves is available on the ECB's website.

Related Topics

  • FX market operations

    In accordance with the TFEU, Banca d'Italia may be called upon to intervene on the foreign exchange market together with the other NCBs and the ECB. The Bank monitors the foreign exchange market and publishes the euro foreign exchange reference rates.