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2020 | OriginalPaper | Chapter

24. Bank of Israel: Integrating Equities into the Foreign Exchange Reserves

Authors : Andrew Abir, Golan Benita

Published in: Asset Management at Central Banks and Monetary Authorities

Publisher: Springer International Publishing

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Abstract

Recently a number of central banks, including the Bank of Israel (BOI), have started to add risky assets such as equities to the traditional investment assets. This chapter elaborates on BOI’s motivations to add equities to its portfolio, describes the process of its move into investing in equity, and reports on the contribution of equity investment to its portfolio performances. This chapter also describes the BOI investment philosophy, which has guided its investment decisions in the process of moving into equity.

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previous chapter Modern Central Bank Reserves Management: Introduction and Overview
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Footnotes
1
See also Bank of Israel (2017).
 
2
See also Chap. 4.
 
3
Including dividends.
 
4
With maturities of 1–10 years.
 
5
Based on rolling annual return.
 
6
Bloomberg Liquidity Assessment quantitatively estimates a security’s liquidity in terms of the security’s liquidation cost and the number of days to liquidate an associated volume.
 
7
See also Bank of Israel (2017).
 
8
Including deposits and cash at central banks, whose inherent risk level is equal to the country risk implicit in holding government bonds.
 
9
The largest nine equity markets of the advanced economies.
 
10
See also Bank of Israel (2017).
 
11
Levy (2015).
 
12
Fama and French (1996).
 
13
See also Bank of Israel (2017).
 
Literature
Degutis, A., & Novickyte, L. (2014). The efficient market hypothesis: A critical review of literature and methodology. Ekonomika, 93(2), 7–2.CrossRef
Levy, M. (2015). It’s easy to beat the market (Working Paper). Bank of Israel.
Fama, E. F., & French, K. R. (1996). Multifactor explanations of asset pricing anomalies. The Journal of Finance, 51(1), 55–84.CrossRef
Fama, E. F., & French, K. R. (2008). Mutual fund performance. The Journal of Finance, 63, 389–416.
HSBC Reserve Management Trends. (2018). Central Banking Publications.
Kalu, K. (2017). A re-examination of the asymmetry between interest rates and stock returns. International Journal of Economics and Finance, 9(6), 23–30.CrossRef
Bank of Israel. (2010). Bank of Israel Law 2010. Retrived from https://​www.​boi.​org.​il/​en/​NewsAndPublicati​ons/​LegislationAndRe​gulations/​Pages/​Default.​aspx.​
Schwert, G. W. (2003). Anomalies and market efficiency. In G. M. Constantinides et al. (Eds.), Handbook of the economics of finance (pp. 937–972). Chap. 15.
Metadata
Title
Bank of Israel: Integrating Equities into the Foreign Exchange Reserves
Authors
Andrew Abir
Golan Benita
Copyright Year
2020
Publisher
Springer International Publishing
Book
Asset Management at Central Banks and Monetary Authorities

Print ISBN: 978-3-030-43456-4

Electronic ISBN: 978-3-030-43457-1

Copyright Year: 2020

DOI
https://doi.org/10.1007/978-3-030-43457-1_24