BCV emphasizes rigor and transparency in the management of international reserves to guarantee financial stability

Praia, 13 August (Inforpress) – The Bank of Cabo Verde (BCV) stated today that international reserve funds are crucial to ensuring price stability and the country’s financial sustainability, whilst guaranteeing management characterised by transparency and rigour.

In a press release, the central bank clarified that the foreign currency held in its custody is essential for maintaining the unilateral peg system, whereby the value of the Escudo is linked to the euro. This mechanism allows the value of the national currency to be fixed, instilling confidence in investors and ensuring that Cabo Verde has the resources to service its external debt and pay for imports.

The institution emphasised that capital preservation and immediate liquidity are the top priorities when investing reserves, with the pursuit of returns being secondary to these criteria and restricted to low-risk instruments. 

In an effort to mitigate credit and market risks, the BCV has further diversified its portfolio. In addition to holding assets in euros and US dollars, the central bank began, from 2020, to invest in the Chinese currency, in sustainable projects and in monetary gold.

MGL/CP

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