An important objective of holding the reserves is to be prepared for contingencies, but the range of instruments available to satisfy this need is limited. Nevertheless, the management of reserves has been changing and there has been a quest for higher returns within these traditional objectives.
To quote Mr. Philip D. Wooldridge of the BIS, in his latest article on “The Changing Composition of Official Reserves” in the September 2006 issue of the BIS Quarterly Review: “Continuing a trend that began in the 1970s, when reserves were first reallocated from US Treasury bills to bank deposits, reserve managers have been gradually shifting into higher-yielding, higher-risk instruments.