6 Moreover, with the growing importance of institutional investors, including pension funds, on pricing in financial markets central banks need to pay attention to certain risks emerging from these developments. In particular, an “agency problem” will inevitably exist in the behavioural pattern of institutional investors arising from the difficulty of perfectly aligning the incentives of savers and those of the delegated portfolio managers.
This may create issues of moral hazard, which are often resolved by judging the performance of portfolio managers against certain benchmarks. This could in turn lead to herd behaviour among investment managers and potentially to misaligned financial market prices that may blur the content of the information retrieved by the central bank.