Performance measurement issues in central banks

Central banks play an important role in financial system and are an essential part of overall public sector finances. Monetary policy responsibilities are common to all central banks. Financial stability is another area of central bank activity. Central banks provide financial stability by controlling the actions of the commercial banks. Central banks also are as lenders of last resort and payment mechanism managers. But the key issue in this article is to concentrate on foreign reserves management as a source of bank profit. The aim of this research is to create a performance valuation framework which could help to compare foreign reserves management results in different central banks. Quantitative and qualitative reasearch methods are used in this article. For quantitative analysis various statistical techniques are used and for qualitative analysis the main method is a case study. There are a lot of measures for commercial banks sector valuation but in practice we see a lack of analysis tools for central banks performance measurement. Foreign reserves management is an ongoing process aimed at maximizing expected return over a defined investment horizon. Valuing foreign reserves management results we should concentrate on specified risk budget and the opportunity to have different kind of assets in the investment portfolio.