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🇬🇧 United Kingdom /Economy & Trade

Why are European countries moving their gold out of North America?

From BBC News · () English

Summarized by DistantNews. Read the original for the full story.

At a glance

Explainer Named sources Context piece
  • The Dutch central bank moved 86 tonnes of gold from the United States and Canada to the Bank of England, citing geopolitical unrest and the need to keep reserves readily available during a crisis.
  • France and Germany have also brought some gold reserves home or moved them from overseas storage in recent years.
  • Analysts say wars and trade tensions are factors, but inflation, interest rates, liquidity and diversification also influence central banks’ storage decisions.

The Netherlands has moved 86 tonnes of gold from storage in the United States and Canada to London, saying the relocation would leave it “better prepared for severe crises.” The transfer involved part of the roughly 313 tonnes the country held in North America and reflected what the Dutch central bank called increasing geopolitical unrest.

Better prepared for severe crises.

· De Nederlandsche BankThe Dutch central bank gave this reason for moving gold from North America to London.

The move has raised questions about whether European central banks expect a major economic shock. The evidence in the article points instead to a broader effort to keep reserve assets accessible and strengthen resilience. France has also announced that it removed gold reserves from the United States, while Germany’s Bundesbank transferred more than 216 tonnes from overseas locations over several years ending in 2016.

Goldman Sachs research analysts Lina Thomas and Daan Struyven said European central banks had moved some holdings to New York during the Cold War, showing that storage strategies have changed with global instability. Joseph Cavatoni of the World Gold Council said wars and trade tensions were influencing decisions, but were not the main factors. Inflation, interest rates and the ability to trade gold quickly also mattered.

Some European central banks moved part of their gold holdings to New York during the Cold War.

· Lina Thomas and Daan StruyvenThe Goldman Sachs analysts placed current storage decisions in a longer history of geopolitical uncertainty.

“I don’t get a sense that there’s an impending doom,” Cavatoni told the BBC. He said reserve managers were becoming better informed about how to manage and expand their holdings and how to use those assets effectively.

I don’t get a sense that there’s an impending doom.

· Joseph CavatoniThe World Gold Council strategist said the relocations did not necessarily signal an expected economic catastrophe.

The Dutch gold is now stored in the Bank of England’s vaults. Dutch central bank governor Olaf Sleijpen said the country expected never to need the reserves, but still needed to improve its preparedness. London remains an attractive location because it is a major trading centre, and the Bank of England holds about 400,000 gold bars worth more than £200 billion. World Gold Council surveys show it remains the most popular vaulting location, although central banks are increasingly spreading their gold across different sites.

We expect that we will never need to use them, but we do need to strengthen our resilience and preparedness.

· Olaf SleijpenThe Dutch central bank governor explained the rationale for moving the gold.
About this summary

Originally published by BBC News. Summarized and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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