CENTRAL BANK

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CENTRAL BANKS AND GOLD
1. Central banks, international entities (e.g.
International Monetary Fund) and
governments are the single largest holder of
gold in the world
2. These institutions controlled end of 2009 16.2
per cent (26,780 tons) of the worldwide
available gold

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CENTRAL BANKS AND GOLD
1. All, ever produced gold is estimated to be
165,000 tons (5.321 billon ounces)
2. This corresponds to a market value of 7,950
billion US dollar, based on a gold value of
1427 per ounce
3. The gold fund SPDR Gold Shares held 1,300
tons 2010, making it the 6th largest gold holder
after France and before China

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CENTRAL BANKS AND GOLD

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CENTRAL BANKS AND GOLD
1. In 1999, 19 institutions signed the Washington
Agreement on Gold (WAG). This ten year
agreement restricts the sale of gold by its
members to 500 tons annually
2. Signatories are the central banks having the
Euro, the European Central Bank, the central
banks of England, Switzerland and Sweden

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CENTRAL BANKS AND GOLD
1. Central banks in the West have been net
sellers of gold, whereas those in the East have
bought more gold than they sold
2. In the last years, several central banks, notably
from Russia, India and China, have announced
plans to increase their gold reserves

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CENTRAL BANKS AND GOLD
1. As a consequence, in 2009 central banks have
become for the first time in 20 years net
buyers of gold
2. In that year, net buying resulted in 470 tons of
gold. The invigorated interest in gold can be
traced back to the financial crisis, as this
precious metal can be used as a hedge

8. 8
CENTRAL BANKS AND GOLD
1. As a consequence, in 2009 central banks have
become for the first time in 20 years net
buyers of gold
2. In that year, net buying resulted in 470 tons of
gold. The invigorated interest in gold can be
traced back to the financial crisis, as this
precious metal can be used as a hedge

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CENTRAL BANKS AND GOLD
1. Gold played a major role for the economic
policy of a state, as many countries either
issued gold coins as means of payment, or
pegged their national currency to gold
2. This leads to a fixed exchange rates and
fosters international trade

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CENTRAL BANKS AND GOLD
1. The monetary system, in which the standard
economic unit of account is a fixed weight of
gold is called gold standard
2. Most Western countries followed this system
from the end of the 19th century until the 2nd
World War

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CENTRAL BANKS AND GOLD
1. Under the gold standard, central banks had
the duty to keep the gold reserves at a certain
levels to guarantee the gold pegging of their
currencies
2. The successor of the classical gold standard
was the Bretton Woods System (1946 – 1971)

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CENTRAL BANKS AND GOLD
1. Under the Bretton Woods System many
countries fixed their exchange rate to the US
dollar. And the US Central Bank fixed the
dollar to gold (with around US$ 35 per ounce)
2. The end of Bretton Woods introduced
floating exchange rates which diminished the
role of gold as part of the monetary policy

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CENTRAL BANKS AND GOLD
1. Therefore, gold as part of the reserves of
central banks shrunk from 60 per cent in 1980
to 8.6 per cent in March 2005
2. In September 2010, gold constituted 10.1 per
cent of central banks’ reserves

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