Central bank governor Patrick Honohan: bank has nearly €1.5bn in reserves

Central Bank governor Patrick Honohan will give a speech to a private summit of central bankers and sovereign wealth funds at the Bundesbank in Frankfurt next month. The conference will discuss how the $10trn of assets held by official monetary and financial institutions can become a more potent force on world capital markets.

David Marsh, co-chairman of conference organiser Official Monetary and Financial Institutions Forum, told the Sunday Tribune a key topic of the talks will be the diversification of reserves held by eurozone central banks, such as Ireland's, and how the sovereign wealth model may apply to their situation.

"Central banks are becoming more like sovereign wealth funds," Marsh said.

"Because of European monetary union, [eurozone] central banks don't need all that money, which was a store of wealth against a foreign exchange crisis, to protect their currencies. The question is: what to do with the reserves?"

He suggested central bank money could be used to buy sovereign debt as "Greece was in the background" and "there is now intense competition to issue debt".

The Central Bank of Ireland holds nearly €1.5bn in reserves, 10% of which is gold. The rest is foreign currency and so-called "special drawing rights" - IOUs backed by members of the International Monetary Fund.

Honohan will deliver a speech on the Irish economy, the banking system and the State's financial situation and policies.

OMFIF is a new global body whose members include large asset managers State Street, which has a significant Irish presence, and DZ Bank. The conference will take place from 2-3 March.