HSBC Reserve Management Trends: Adapting to an uncertain outlook

Central bank reserve managers are reassessing allocations across currencies and geographies as they respond to an uncertain global outlook, according to HSBC’s latest annual survey.

The survey, conducted in partnership with Central Banking, an independent publication for central banks which is supported by an Editorial Advisory Board that includes former governors, includes data on currency and asset class diversification, providing new insights into how central banks are adjusting their reserve management strategies in times of uncertainty.

Over the past year, the survey found that almost 80% of reserve managers incorporate geopolitical risk in their decision making.

The survey also highlighted that diversification is not only with respect to portfolios, but also counterparties and the location of assets. Conducted between January and early March, this year’s survey drew responses from 101 central banks managing reserves totalling USD9.5 trillion.

Reserve managers are closely watching new developments in a highly charged global environment. In this year’s survey, 70% voted geopolitical tensions as the most significant risk they are facing in 2026.

While geopolitical events loom over decision-making in the near term, inflation and interest rates remain the primary concern for reserve managers over the next five years, with 52% of those surveyed ranking this as the top factor influencing reserve management.

Gold has become increasingly important to central bank reserve managers, with 39% of respondents planning to add to holdings in 2026. The precious metal’s outperformance, with a 90% rise in prices in 2025, has not deterred buyers: 73% of respondents invest in gold, up from 69% last year, and 72% say the current (elevated) price of gold is not preventing them from making further purchases.

Reserve managers, however, are alert to the risks posed by high prices and portfolio concentration. While the survey was conducted before a significant correction in mid-March, almost four in 10 (37%) indicated plans to be more active in managing their gold reserves.

While managers are actively reviewing their positioning across currencies and precious metals, there is little sign of a shift away from the US dollar as the world’s reserve currency.

Most reserve managers believe de-dollarisation will be a gradual process, and 80% think the US dollar is still the safe-haven currency. However, a number of those that agreed expressed that its position is being challenged.

US Treasuries remain in demand: more respondents signalled an intention to increase rather than reduce their exposure to Treasuries in the coming year. T-bills are the preferred tool for liquidity management, used by 83%.

Sentiment towards the euro has turned positive. A majority (68%) say the euro has become more attractive as a reserve currency over the past 12 months. Lower yields (relative to the USD) and the supply of high quality liquid assets remain a limiting factor.

There was also a small positive pickup in sentiment for the RMB after a drop in each of the preceding three years. On average, respondents anticipate that RMB will represent 7.2% of global FX reserves by 2035, up from a predicted 6.5% in last year’s survey.

Interest in artificial intelligence (AI) is growing, albeit from a low base. Of the reserve managers in the survey, 18% are using AI to optimise their reserve management operations, up from 11% last year. Data governance and privacy rank as the top barrier to adoption; however concerns are easing to some extent: 35% are considering AI tools, up from 28% in last year’s survey.

The proponents of AI see benefits in the use of data-driven insights to identify macro risks as early as possible, as well as for algorithmic trading and liquidity forecasting. However, 54% saw no disadvantage in slow AI adoption, indicating a cautious approach.

No central banks participating in the survey reported any holdings of stablecoins or cryptocurrencies. However, 27% believe digital currencies are becoming more credible as an asset class. Central bank digital currencies (CBDCs) rank as the most credible digital assets, ahead of stablecoins and cryptocurrencies. Six would consider investing in stablecoins in 5 to 10 years’ time, up from two in last year’s survey, signalling a positive albeit muted shift in sentiment towards these assets.

The reserve managers who answered this year’s survey are acutely aware of the risks they face in the strained global environment. While volatile asset prices are a challenge, many are taking the opportunity to actively adjust their strategies to diversify their positions to manage risks.

Over the next 12 months, there are clear expectations that the pace of diversification will accelerate. Over half are looking to diversify asset classes, while 37% are considering currency diversification, and a third anticipate increasing liquidity. The speed of these adjustments will be a key factor in how reserve managers respond to uncertainty in today’s volatile environment.