2025 Public Sector Perspectives

A handful of countries keep all their gold onshore, including (according to reports) the U.S., U.K., Russia and China. Nevertheless, most countries continue to hold some of their gold reserves offshore for three reasons: • Offshore gold vaults offer better security. • Insufficient facilities for storing all their gold in their home countries. • Storing gold in countries with developed gold market facilitates allows trading and other market activities. The above explains why a significant portion of global gold reserves continue to be stored at the Bank of England and Federal Reserve Bank of New York. London and New York are international gold trading centers. Storing gold in London and New York allows it to be easily lent out or executed in different forms of gold trades. All these characteristics have encouraged central banks to place at least part of their gold reserve in London and New York. Shanghai Futures Exchange and Shanghai Gold Exchange, which were established just over 20 years ago, are becoming more prominent in the gold trading market. However, they have their own challenges when compared tomarkets in London and New York, including a limited product offering, a relatively small gold lending market, and the limited participation of international banks and gold dealers, among others. However, for countries not allied to theWest and looking for diversification, these Chinese exchanges offer an attractive alternative. Chart 5. Current top central bank holders of gold Ranking Countries Tonnes % of Total Foreign Reserve 1 United States 8,133.5 73.2% 2 Germany 3,351.5 72.5% 3 Italy 2,451.8 69.2% 4 France 2,436.9 70.9% 5 Russia 2,335.9 30.3% 6 China 2,264.3 5.1% 7 Switzerland 1,040.0 9.1% 8 India 846.2 9.8% 9 Japan 846.0 5.4% 10 Netherlands 612.5 62.9% Source: World Gold Council 5 Note: Data as of July 2024 28 The Changing Role of Gold in Central Bank Reserve Management