BIS paper explores reserve management and sustainability, and the case for green bonds

Article summary

The Bank for International Settlements (BIS) has published a working paper which explores how central banks might expand the usual triad of objectives—liquidity, safety and return—to fit environmental sustainability considerations into their reserve management frameworks. This can be done either by explicitly articulating sustainability as a defined purpose of holding reserves, or implicitly as a supporting aspect of existing policy purposes. In each case, this will involve additional trade-offs. The paper assesses these, based on the example of green bonds.