Handbook of Exchange Rates

19.9 External Managers

As central banks have broadened their investable universe over the years, they have also increasingly made use of external managers to invest a part of their reserves. In most cases, this has been relatively small but some have reportedly outsourced more than 15% of their reserves. External advisors are used primarily to develop the central bank's own in-house expertise and to gain access to asset classes for which in-house knowledge was lacking, such as mortgage-backed securities. (Source: BIS Paper #40, pp. 2–8). Since the financial crisis, many Central Banks are rethinking the use of external managers as they evaluate the performance of external managers during the crisis (often poor) and reconsider the range of investable assets.