Bank Reserve

How Bank Reserves Work

How Bank Reserves Work
Required and Excess Bank Reserves
Required and Excess Bank Reserves
Primary Reserves
Understanding Primary Reserves
Understanding Primary Reserves
Understanding Primary Reserves
Understanding Primary Reserves
Understanding Primary Reserves
Excess Reserves
Understanding Excess Reserves
Understanding Excess Reserves
 Foreign Exchange Reserve
Management by Bangladesh
Bank
Foreign Exchange Reserve
Foreign exchange Reserve –Contd.
Foreign exchange Reserve –Contd.
Reasons for holding reserve
Objectives of holding reserves
Sources of foreign exchange reserves
Reserve Management
Objectives of Reserve Management
Empowerment
Investment Committee
Main functions of Reserve Management
Organizational set up
Technological Set-up
Eligible Assets Classes
Currency Composition
Currency Composition

1. US dollar
2. Euro
3. GBP (Great Britain Pound)
4. AUD (Australian Dollar)
5. CAD (Canadian Dollar)
6. JPY (Japanese Yen)
7. SDR (Special Drawing Rights)
8. CNH (Chinese Yuan)
Risk Management
Exchange rate risk
Liquidity risk
Credit risk
Interest rate risk
Operational risk
Reserve Adequacy Indicators
Reserve Adequacy Indicators (metric)
1. Identifies various potential sources of risk
Export earnings (X), Short term debt (STD), Medium and long term debt and
equity liabilities (OPL), Broad money (M2)
2. Quantifies reserve adequacy by the following formula:
0.30 * STD +0.15*OPL+0.10*M2+0.10*X (Fixed ER)
0.30 * STD +0.10*OPL+0.05*M2+0.05*X (Floating ER)

3. Reserve adequacy = 100%-150% of this metric

4. The conclusion from the above metric is that fixed ER requires more reserves.
Reserve of South Asian Country (Bln $)
Year India Bangladesh Pakistan Sri Lanka
2016 360.30 32.09 21.95 5.63

2015 330.21 23.03 10.42 7.84

2014 320.00 21.51 10.30 8.33

2013 295.50 15.32 7.65 7.50

2012 296.54 10.36 13.69 6.88

2011 300.86 10.91 17.70 5.96

2010 295.03 10.75 17.26 6.61

2009 283.64 7.47 13.61 5.10

2008 254.05 6.15 9.02 1.75

2007 272.72 5.10 15.80 3.06

2006 176.23 3.48 12.88 2.53

2005 144.05 2.93 11.11 2.45

Source: RBI web site, Reuters, Bangladesh Bank

Top reserves holders
1. China - $3,030 bln
2. Japan – $1,188 bln
3. Switzerland -$640 bln
4. Saudi Arabia - $536 bln
5. Taiwan - $434 bln
6. Hong Kong - $386 bln
7. South Korea - $366 bln
8. Brazil- $362 bln
9. India - $340 bln
10.Russia– $317bln
Exchange rate in Bangladesh
Exchange rate in Bangladesh
Exchange rate in Bangladesh
Thank You