Gold has been at the heart of central banking for centuries. Once an official currency, it has become a cornerstone of modern reserve management. Emerging market central banks have been particularly active purchasers in recent years, and have occasionally acquired gold from local artisanal and small-scale producers.
This report from the World Gold Council examines how these domestic purchasing programmes work, the benefits they can confer, and the challenges of raising environmental, social and governance (ESG) standards in the Artisanal and Small-Scale Gold Mining (ASGM) industry.1
Using four case studies we examine ways in which central banks can use these programmes to increase their reserves, enhance the welfare of local communities, and create a more robust and sustainable ASGM sector. We then provide recommendations to encourage responsible ASGM practices and a list of policy options aimed at improving central bank gold purchasing programmes.
Such benefits are, perhaps, more relevant today than ever. ASGM activity provides a livelihood for over 20 million people across developing countries, a number that has more than trebled since the start of the century.2 Formalising the sector can increase prosperity and alleviate some of the socially and environmentally damaging issues that beset this industry. Central banks wield market power that can be used to foster and enforce lasting change through implementation of international standards and best practices.