ASSET AND RESERVE MANAGEMENT
It shall be incumbent on Banco de Portugal (Article 12 of its Organic Law) to manage the foreign assets of the country or any other assets entrusted to it, namely:
- Management of its own or other parties’ investment assets;
- Management of the foreign exchange reserves of the European Central Bank (ECB).
The management of the foreign exchange reserves of the ECB shall comply with the principles laid down in “The Bank and the Eurosystem – European System of Central Banks – ECB – Reserve management”.
As regards the management of its own investment assets, Banco de Portugal, via the Market and Reserve Management Department, shall:
- Permanently analyse and monitor money, foreign exchange and financial markets, both to provide the Board of Directors with a timely information of the most relevant market variables developments and within the framework of the management of investment assets by Banco de Portugal, preparing forecasts on the evolution of the most the most relevant variables;
- Carry out the front-office functions related to the management of the financial assets of Banco de Portugal and other entities, denominated in euros, foreign currency and gold;
- Ensure the back-office functions related to the processing of all reserve and assets management operations, as well as other operations involving foreign currency or non-residents;
- Guarantee, by appropriate technical means, the control of risks incurred in the management of Banco de Portugal and other entities’ assets. Evaluate the performance of portfolios managed by Banco de Portugal. Review and analyse the methodologies to be applied and the risk indicators to be implemented and monitored;
- Ensure the operation of the information system for reserve and assets management and its functional administration;
- Prepare activity reports.
The management of its own investment assets aims at obtaining the best possible return, without jeopardizing the overall objectives of capital protection and integrated management of the Bank’s assets and liabilities. It is ruled by the “Normas Orientadoras da Gestão de Activos de Investimento Próprios” (“Guidelines relating to the management of Banco de Portugal’s own investment assets”), approved by the Board of Directors.
These Guidelines establish the strategic reference portfolios and the constraints and limits applicable to management (namely in terms of risk), as well as the competences delegated to the responsible Department and information the latter shall supply to the Board of Directors.
In addition to the Guidelines, the tasks related to the implementation, processing, risk and limit control, and performance evaluation are laid down in specialised Manuals of Procedures addressed at the respective performing parties.
All parties intervening in Banco de Portugal own investment assets management are obliged to comply with the provisions laid down in the Code of Conduct of Banco de Portugal, as well as with an activity specific-code [the Code of conduct of Banco de Portugal shall be used in the management operations of Banco de Portugal’s own investment assets and other funds managed by the Bank (except ECB reserves)].
The management of other assets (except ECB reserves, for which specific procedures apply), albeit subject to specific principles, follows, in general, the procedures defined for the management of its own investment assets.