The Bank of Cape Verde published an overview of its international reserve management framework, which supports the Cape Verdean escudo’s unilateral peg to the euro. Reserves are managed in order of priority to preserve capital, maintain liquidity and generate returns, with diversification across countries, currencies and asset classes used to mitigate credit and market risks. Strategic decisions rest with the board, supported by an investment committee and specialist staff, while part of the management is delegated to the Central Bank of Luxembourg. The central bank reviewed its diversification since 2020 beyond EUR- and USD-denominated assets into Chinese currency through the Bank for International Settlements-managed BISIP CNY fund, sustainable financial instruments and a residual allocation to gold. It purchased about one ton of gold, or 32,000 troy ounces, for USD 63 million in 2020 and sold the position in 2022 after the dollar’s appreciation, realizing considerable capital gains. Reserve transactions and their income, foreign exchange and valuation effects are reflected in the bank’s published, externally audited financial statements.
Bank of Cape Verde2026-08-13
Bank of Cape Verde reviews international reserve management and diversification strategy
The Bank of Cape Verde outlined how it manages international reserves to support the escudo’s euro peg, prioritizing capital preservation, liquidity and returns. It also reviewed diversification into Chinese currency, sustainable instruments and gold, including the profitable 2022 sale of a USD 63 million gold position acquired in 2020.