📈 AIIB Urges Central Banks to Build Larger Buffers & Sharpen Judgement

Speaking at the Central Bank of Sri Lanka Reserve Management Conference 2026 in Colombo, Asian Infrastructure Investment Bank (AIIB) Treasurer Domenico Nardelli called for central banks to hold larger liquidity buffers to navigate faster, more frequent financial shocks. • Key Market Signals & Volatility • Fixed income experienced real stress: US 5-year Treasury yield sold off ~1% in 6 months; 30-year yield swung significantly in 2 days. • Gold dropped ~30% in 1H 2026 before rallying toward US$ 5,000/oz; AIIB avoids gold due to extreme volatility. • MDB bonds (mostly in US dollars) present a stable alternative for credit diversification. • Global Reserve Trends • The US Dollar maintained a dominant 57% share of the ~US$ 13 Tn global reserves in Q1 2026. • No immediate flight from the US Dollar, though geopolitical and climate risks drive push for jurisdictional diversification. • Technology & AI Adaptation • Tokenisation and blockchain to accelerate global diversification by lowering cross-border costs. • AIIB deployed in-house AI tools trained on treasury data, cutting portfolio analysis time from hours to seconds for its US$ 30 Bn portfolio. • Strategic Takeaways • Liquidity buffers should be treated as essential insurance rather than a drag on returns. • Central banks must prioritize preserving market confidence and protecting capital over market forecasting.