Participants engaged in dynamic discussions, sharing insights and strategies for effectively managing public assets amid rapidly evolving economic conditions. Below are some of the key takeaways:
1. Strong institutions, particularly a robust central bank, are critical in mobilizing and managing financial resources for sustainable development. Central banks have played a foundational role in driving economic progress by maintaining financial stability and implementing internationally aligned policies. Beyond their traditional functions, central banks have prioritized internal governance reforms to boost transparency and accountability, to build public trust, and to attract foreign investment. Similarly, central banks’ efforts in embracing digitalization are crucial in modernizing the financial sector by enhancing efficiency, broadening access to services, and enabling integration with international financial systems.
2. Public asset managers are facing an exceptionally challenging global landscape shaped by rising uncertainty, trade tensions, and geopolitical risks, exerting significant pressure on their investment mandates. The concern is that these disruptions could have lasting implications and trigger permanent systemic consequences, especially among emerging market economies, raising critical questions about their long-term impact on global markets. This unpredictable environment is also raising questions about the future of global reserve currencies and trade dynamics, making it even more difficult for public asset managers to navigate volatility.
3. Long-term thinking and flexibility are key for public investors navigating the current short-term volatility, as scenario planning and preparing for multiple outcomes become essential tools in today’s uncertain environment. With policy unpredictability now a permanent feature of the global landscape, dynamic scenario-based approaches to risk management are vital. Prioritizing liquidity and high-quality credit, while making strategic adjustments, may help strike the right balance between near-term caution and long-term objectives.
4. Public sector investors are re-evaluating the currency composition of their portfolios. While no viable substitute matches the U.S. dollar’s liquidity and global status, alternatives such as the euro, renminbi, SDRs, gold, or CBDCs are gaining attention—even if observed changes have been limited. In this evolving landscape, public asset managers are closely monitoring global developments and reassessing how best to balance stability with strategic diversification.
5. Gold is regaining strategic relevance amid geopolitical risk, yet its limitations as a reserve asset remain evident. Rising uncertainty bolsters gold’s role as a safe haven, but its utility is constrained by high volatility, a lack of income generation and collateral value, limited liquidity, and high storage and insurance costs. While it has gained appeal, particularly among some emerging markets in response to financial instability or sanctions, it remains a secondary asset in most central bank portfolios.
6. Artificial intelligence and technological innovation offer tremendous potential for public asset managers, but adoption and limitations are being explored. These technologies have the capacity to transform key functions like asset allocation, compliance, risk management, and reporting by automating processes, integrating diverse and alternative datasets, and supporting decision-making. The rise of private digital money and CBDCs could accelerate financial inclusion, but they are unlikely to replace fiat systems. However, challenges such as data quality, transparency, and privacy concerns, along with the complexity of implementation, limit the full integration of these technologies. Public asset managers are carefully exploring how to leverage these capabilities to enhance efficiency while managing their limitations.
