Future-Proofing Reserve Management & Monetary Operations – Central Banking

Indeed, “AI and technology are becoming critical for optimising reserve management,” an official from a central bank in the Americas told Central Banking in response to the HSBC Trends in reserve management 2025 survey.

Among 84 central banks with over $7 trillion managed in FX reserves, 29% of reserve managers said they were considering using AI and 11% said it was already in use. Asked in 2024 about the potential of AI in reserve management, a resounding 93% of 88 reserve managers viewed it positively, agreeing that it can help optimise central banks’ portfolios in areas such as rebalancing strategies, tax efficiency and risk-adjusted returns.

Top areas identified for applying AI among 82 reserve managers were reporting (85%), trading and execution (71%), risk management (67%) and portfolio management (66%), followed by strategic asset allocation (59%) and cyber security (54%).

The Bank of Portugal’s Alya AI initiative exemplifies the power of AI insights in enabling proactive reserve management. Its market sentiment analysis function has helped the central bank diagnose market trends based on unstructured information pooled from news and research that can be turned into actionable intelligence.

However, there are signs there is a gap between technological ambition among central bank officials and their ability to implement cutting-edge solutions without public-private partnership.

The Central Banking 2025 Fintech benchmarks revealed just 5% of 20 central banks said they currently use the cloud for reserve management or market sentiment analysis. More broadly, although 80% of 30 central bank respondents said they use cloud services, only half of those use the cloud for AI tools (40%), and fewer still for its enhanced processing power (20%). Resources are a key issue, officials told the Central Banking Summer Meetings 2025. Beyond resources, other important considerations to adoption include platform capacity and implementation road maps.

Nevertheless, exclusive comments shared with Central Banking in the Fintech benchmarks revealed that the perceived advantages of cloud technology among central bankers include reduced IT costs and novel computing. “Upgrades and infrastructure management are easier and quicker,” said one official from a central bank in the Americas. “Scalability and cutting-edge technologies” are benefits, said another.

Risk management pertaining to upgrades is critical, and it is essential that the increased sophistication of analytical and operational capabilities is matched by the resilience of the new systems powering them. In this vein, business continuity also emerged as one of the greatest perceived benefits of cloud services (71%) among 28 central banks responding to the benchmarks.