2014-10-06
Having received approval from the People’s Bank of China and having finished the necessary legal procedures for investment in China’s capital market, the Bank of Lithuania for the first time invested a small part of the foreign reserve assets in China’s securities.
“This step allows to us to achieve broader investment risk diversification and higher long-term return on Lithuania’s foreign reserve assets by investing in the gradually opening capital market of China which is the second largest economy in the world,” says Mindaugas Vaičiulis, Director of the Banking Service of the Bank of Lithuania.
The Bank of Lithuania is one of the first members of the European System of Central Banks that invested in China and is the first among them to obtain the status of qualified foreign institutional investor in China. Our country’s central bank was granted a USD 100 million quota and an approval to invest in China’s interbank bond market.
M. Vaičiulis also noted that principles of security and liquidity take priority against profitability when investing Lithuania’s foreign reserve assets.
The Bank of Lithuania and China Securities Regulatory Commissionhave earlier signed a Memorandum of Understanding regarding securities and futures regulatory cooperation. This enables all financial institutions in our country to apply for the status of qualified foreign institutional investor that would allow them to directly invest in China’s on-shore securities market.
In response to the recent trends of the global economy and financial markets, as well as having taken into account the recommendations of the World Bank, the Bank of Lithuania updated its investment policy of financial assets last year. The policy changes provide conditions for investing Lithuania’s foreign reserve assets more flexibly and, in the long run, more profitably.
In August, the Bank of Lithuania’s official reserve assets amounted to LTL 21.9 billion (EUR 6.3 billion).