In recent months several international commentators have called for central banks in emerging market economies to hold a higher percentage of gold as part of foreign exchange (FX) reserves. Large emerging market economies such as China and India hold less than 7% of foreign reserves as gold. However, the legacy of the Bretton Woods system means the Federal Reserve holds about 75% of its foreign reserves as gold, Italy about 65% and France around 70%. It should be noted that the United States does not need to hold a lot FX reserves given that the US$ is the world’s dominant reserve and vehicle currency, and it will be that way for a few more decades until viable alternatives share the space, but will not be able displace the dollar (far left-wing PPP ideologues should bear this in mind).
Gold is a very liquid asset that serves the purpose of making international payments (like US Treasury assets). So, for example, if a small economy like Guyana needs to buy an aircraft, the manufacturer will not take payments in gold bars but will accept the US$ the small economy’s gold bars can purchase on the very liquid global market.
Meanwhile, the audit of the Guyana Gold Board (GGB) revealed several important findings such as possible fraud at the previous Bartica office (it seems like they were deliberately buying gold at a high price, hence a possible rip off of the people’s money) and the G$10 billion trading loss. As a result, some news reports and commentators have suggested that Bank of Guyana should be more involved in
