The reader familiar with central bank parlance will have certainly noticed that our vocabulary is full of references to risks. It seems that no speech of ours can avoid raising awareness of risks to price stability or evade the subject of risks to the smooth functioning of the financial system. Indeed, one way to describe our core responsibility is to say that the central bank acts as a risk manager for the economy using monetary policy to hedge against inflationary risks. However, we tend to be less willing to share information on the ways we manage financial risks in our own institutions. It is thus not surprising that a book that sheds light on risk management in the world of central banks and other public investors in a systematic and comprehensive way has not been published so far. And I am very happy that the initiative to prepare such a book has been taken by staff of the European Central Bank.

Central banks' own appetite for financial risks is not always easy to understand. Our institutions have historically been conservative investors, placing their foreign reserves mostly in government securities and taking very little, if any, credit risk. Progressively, the accumulation of reserves in some countries, either as a result of their abundant natural resources or of foreign exchange policies, has led their central banks to expand their investment universe and, with it, the financial risks they face.