Just Released and Available for Download: OMFIF's Report, "Shaking Foundations: Reserves Management in a Volatile World" (2025)

Delighted to pass along notice of the distribution of OMFIF's Report, Shaking Foundations: Reserves Management in a Volatile World (2025). It makes for quite interesting reading. This from the Press Release:

OMFIF’s Global Public Investor has tracked central bank reserve managers’ investment strategies since its inception in 2014. In the first edition of the report, we wrote ‘diversification into different sectoral and geographical categories is increasing’ owing to ‘sub-optimal returns from traditional currencies and instruments’ in a low interest rate environment. Over a decade later, this year’s GPI report shows the appetite for diversification continues. But for very different reasons. The foundations of the global economic order, underpinned by globalisation and the US dollar, are shaking. Protectionism, geopolitical tensions and volatile policy-making are becoming norms. In this environment, close to 60% of surveyed central banks are seeking to diversify their portfolios within the next two years and 96% regard US tariffs as a major geopolitical concern.

Reserve managers expect to move away from dollars and towards other currencies, although this shift will be gradual. The dollar was the only currency that saw demand fall this year, while a net 16% of survey respondents intend to add to their euro holdings over the next two years. Gold is shining brightest as a diversifier and 32% of central banks expect to increase their holdings in the short term. Meanwhile, the shift towards corporate bonds and equities is likely to materialise over the next decade rather than in the next few years. This year’s report also incorporates insights from public pension and sovereign funds to understand how they are responding to new pressures. Their views paint a similar picture – more hesitance on US investments and less willingness to add risk to portfolios. In total, the GPI draws on insights from 90 official institutions with over $7tn in assets.This provides an important snapshot into how public investors at the heart of global finance are adapting to current conditions.

 

 

The key findings as reported: 

• 90 official institutions surveyed for the GPI 2025 report, comprising 75 central banks and 15 public pension and sovereign funds, with more than $7tn in assets combined.
• 31% of reserve managers up from just 4% last year now cite geopolitics as the top factor shaping investment decisions, with 96% of central banks flagging tariffs and trade protection as the main concern.
• While 70% of central banks are increasingly worried about the US political environment, over 80% still see the dollar as offering safety and liquidity, pointing to gradual diversification rather than rapid de-dollarisation.
• A net 16% of central banks plan to raise euro holdings – more than for any other currency while Germany ranks as the most attractive developed market among public funds.
• 32% of central banks expect to increase gold holdings in the next 12–24 months, with over 20% forecasting the price to surpass $3,500 per ounce.
• A net 28% of reserve managers aim to raise allocations to government bonds, while public funds are holding steady across asset classes amid ongoing market uncertainty.

The Table of Contents and Foreword follow below.