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Announcement on Renminbi reserve portfolio investment

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Budapest, 2015. május 28. - The Magyar Nemzeti Bank has made the first step to invest in Chinese government bonds based on a previous decision of the Monetary Council.

At the announcement of the Magyar Nemzeti Bank’s (MNB) Renminbi Programme on 19 February 2015, the central bank stated its intention to explore the opportunity of setting up a renminbi denominated foreign reserve portfolio. In this context the Magyar Nemzeti Bank reviewed the structural characteristics of the Chinese government bond and foreign exchange markets, the yield and risk profile of the investment as well as the portfolio level diversification effect of such an investment. Taking into consideration the growing significance of China in the global economy, the RMB’s more pronounced role in the international monetary system, and carefully assessing the financial characteristics of the investments, a decision was made to invest a small part of the foreign exchange reserves in Chinese government securities. A significant factor in the decision was China’s high credit rating. The investment in Chinese government securities is in line with the current international trends of foreign reserve management, as more and more central banks in both EU and non-EU countries are investing in China. The first phase of the investment was conducted through an indirect technique in cooperation with the BIS (Bank for International Settlements, Basel) in May 2015. The investment does in no way jeopardise reserve adequacy, which is still regarded to be high.