Management of the reserves of the European Central Bank

Foreign exchange reserves of the European Central Bank

The foreign exchange reserves of the European Central Bank consist of:

  • a US dollar portfolio,
  • a Japanese yen portfolio,
  • gold, and
  • the Special Drawing Rights (SDRs) of the International Monetary Fund.

Eesti Pank’s participation in the reserve management of the European Central Bank

In addition to managing its own financial assets, Eesti Pank actively participates in the management of the ECB's reserves.

On the basis of the currency specialisation model, Eesti Pank cooperates with Suomen Pankki (the Bank of Finland) in managing a share of the ECB’s dollar-denominated security portfolio. Eesti Pank cooperates closely with Suomen Pankki in the following fields:

  • development of an investment strategy,
  • division of operational procedures, and
  • analysis of the portfolio yield.

The ECB's share of the reserves is managed according to the investment rules laid down by the European Central Bank.

The euro area’s central banks, including Eesti Pank, are entitled to a share of the European Central Bank’s profit. After the statutorily required amount has been transferred to the ECB’s general reserve fund, the remainder of the earned profit is distributed among national central banks who are shareholders of the European Central Bank, in proportion to their contributions.

Special Drawing Rights (SDR) are the International Monetary Fund's (IMF) units of account that express the quota of every Member State, giving the amount of their contribution to the fund's capital. A Member State's voting power and the scope of access to the IMF's financial resources in the event of a crisis depend on its quota. The value of SDRs is based on a basket of four major currencies, the US dollar, the euro, the Japanese yen and the pound sterling of the United Kingdom.

Estonia's quota is 93.9 million SDRs, or about 111.2 million euros. Estonia's voting power is 0.07%.

The currency specialisation model enables the Eurosystem national central banks (NCB) to abstain from undertaking European Central Bank (ECB) foreign reserve management activities on behalf of the ECB to save costs, or may pool these operations together with another NCB. The NCBs which undertake ECB foreign reserve management activities are as a rule allocated a share of either the US dollar or the Japanese yen portfolio.