Foreign exchange reserve management
Under a floating exchange rate regime, FX reserves serve primarily to enhance the country’s financial credibility, which is conducive to lowering the cost of financing in global markets and mitigating the risk of a sudden outflow of capital. FX reserves may also be used to support the stability of financial markets and of the banking sector, notably, by providing foreign exchange liquidity in a situation where financial markets are dysfunctional.
In managing the foreign exchange reserves, Narodowy Bank Polski strives to maximize the return on the assets, while giving priority to their safe investment and a requisite level of liquidity.
The bulk of the reserves are invested in Treasury securities of countries with a high credit rating, which are characterised by the highest level of security and liquidity. Non-government securities held in the NBP’s investment portfolios are mainly those issued by international institutions and government agencies. A fraction of the reserves are maintained in the form of short-term deposits at banks with a high credit standing.
Information about reserve management is published in the annual reports of Narodowy Bank Polski.