Central banks all over the globe have boosted equity holdings as sharp falls in bond yields have dented their revenues, according to a new study.
Data from central banks reviewed by the Official Monetary and Financial Institutions Forum (OMFIF) showed state banks have missed out on between $200 billion and $250 billion in interest income "in recent years" as a result of falling yields.
This dent in income in major reserve currencies has prompted banks to make the switch. The Chinese State Administration of Foreign Exchange, which manages $3.9 trillion and is part of the Chinese central bank, has now become the largest public sector holder of equities in the world according to OMFIF.
The think tank also said the People's Bank of China has been buying "minority stakes in important European companies" in what the OMFIF describes as a "new development".
In Europe, the Italian and Swiss central banks are among those bolstering their equity holdings. Of the $480 billion in Swiss foreign exchange reserves at the end of last year, 15 percent was in equities.
Meanwhile, the Italian bank, Banca d'Italia has gradually built up a 6 percent allocation to equities in its euro-denominated financial portfolio.
The report groups central banks, sovereign funds and public pension funds together as "global public investors". Together they have upped their allocations to shares by at least "$1 trillion in recent years."
In total, when gold holdings are accounted for, global public investors have $13.2 trillion in assets, the OMFIF said.
The think tank said central banks were increasingly eyeing opportunities outside of government bond reserves, which have been built up in part as a result of efforts to alleviate the financial crisis, through quantitative easing by central banks in the main developed countries. The volumes of such bonds held by state banks posed a risk to capital markets if ever "deployed on capital markets."
"Many of these challenges [faced by public entities] are self-feeding. The same authorities that are responsible for maintaining financial stability are often the owners of the large funds that have the potential to cause problems," the report found.
—By CNBC's Jenny Cosgrave: Follow her onTwitter @jenny_cosgrave