Central Banks

For many decades, the US dollar has been the main reserve currency worldwide and it still accounts for more than 50% of international reserves. However, its share has been gradually declining, while that of other currencies, like the Chinese RMB, has grown, signalling the potential emergence of a multicurrency reserve system.

A report by the World Gold Council, “Central bank diversification strategies – rebalancing from the dollar and the euro”, examines the growing trend of central banks’ actively looking to diversify their reserve portfolios.

Emerging-market central banks have begun increasing their gold allocations. This study considers optimal gold-allocation ranges for a foreign reserve portfolio from multiple perspectives, when reserves are measured both in US dollars and from a local currency perspective. The study concentrates on nine different emerging-market currencies, including the Indian rupee, Singapore dollar, Brazil real, and Thai baht.

Demand for gold is likely to rise as the world heads towards a multi-currency reserve system under the impact of uncertainty about the stability of the dollar and the euro, the main official assets held by central banks and sovereign funds. This is the conclusion of a wide-ranging analysis of the world…

Demand for gold is likely to rise as the world heads towards a multi-currency reserve system under the impact of uncertainty about the stability of the dollar and the euro, the main official assets held by central banks and sovereign funds. This is the conclusion of a wide-ranging analysis of the world monetary system by Official Monetary and Financial Institutions Forum, (OMFIF), the global monetary think-tank, in a report commissioned by the World Gold Council, the gold industry’s market development body.

Across Europe, economic growth is faltering and in many Eurozone countries, sovereign debt yields are dangerously high.

The World Gold Council has been exploring ways that Eurozone Member States could use their gold reserves to help bring down the cost of borrowing.

We believe that using a portion of a nation's gold reserves to back sovereign debt would lower sovereign debt yields and give some of the Eurozone's most distressed countries time to work on economic reform and recovery.

The following video explores why such a measure could offer an alternative to austerity for the Eurozone.