The panel noted that in view of declining returns in sovereign bond markets, the Bank of Israel took steps to improve risk-adjusted returns, by expanding the reserves’ investment to equities and corporate bonds. The panel said it was particularly impressed by “the carefully managed evolution” of the Bank’s reserves management framework, the “pioneering work its market operations team is conducting” related to sensitivity analysis of the investment portfolios, as well as the Bank’s “in-house development and nurturing of in-house expertise as it has embraced risk-based diversification”.
Central Banking editor in chief Christopher Jeffrey, who served as chairman of the Awards Committee, said, “The Bank of Israel has emerged as a pioneer when it comes to seeking out improved risk-adjusted returns from its growing foreign exchange reserves. The market operations team, led by Andrew Abir, is also keenly aware of the risks involved, given the long-anticipated shift in the interest rate cycle, political events and the unpredictable nature of emergencies.”
Governor of the Bank of Israel Dr. Karnit Flug said, "We are honored to receive this award and I would like to thank the Central Banking Awards Committee for having chosen us. We are very proud of the recognition of all the hard work that has been done by our Market Operations Department over the last few years. The challenges for reserves management have dramatically increased.” The Governor said that the very low yields in developed economies highlighted “the need to achieve adequate returns while maintaining the purchasing power of the reserves as well as a high level of liquidity. The Bank of Israel, like many other central banks, has expanded its universe of eligible assets to meet these challenges, alongside adopting a comprehensive risk framework”.
Central Banking magazine, founded in 1990, is published in London. It is the only independent magazine dealing with central banks. It has subscribers in 140 countries, including most central banks. This year’s prize follows the magazine’s granting in 2016 of the “Transparency Award” to the Bank of Israel. The magazine grants several awards each year in the area of central banking.
For the announcement at the Central Banking website click here.