The third-biggest holder of gold, however, is the International Monetary Fund (IMF) with 3 217 t, about 10% of all official-sector holdings and a little more than 2% of total stocks.
Central banks are large holders of gold and, despite some gold sales in recent years, the official sector still holds some 33 000 t of gold, around 25% of the world's total above-ground stocks. The figures follow a WGC report released last week, which describes the current prohibition by the IMF against using gold as an exchange-rate peg as anachronistic and potentially damaging to some developing countries.
The study, ‘The IMF and Gold’, was prepared by Dick Ware, a former Bank of England and IMF official, currently working for the WGC. Ware says that, for a number of countries, it may be sensible to incorporate gold in a currency or commodity basket anchoring the exchange rate. "We are not talking here about a return to an all-embracing gold standard. "But for some countries the use, or part-use, of gold in an exchange rate peg might be beneficial. "For some developing countries, especially where gold forms a significant part of their exports, establishing some sort of link to its price may make more sense than tracking the dollar and creating an exposure to the effects of US economic policy," he says. However, such an arrangement would require a change in the IMF's Articles, which would be a "long and arduous process. "But times have moved on and there is no longer any need to anathematise gold, especially if its partial use in this way might improve the economic lot of a small number of countries which need all the stability they can get." The IMF continues to hold gold, as it serves an important function in underpinning the Fund's financial strength. Ware says this is especially important today when the Fund is able to make available to members unprecedentedly large multiples of quota. Furthermore, it has remained the majority view of the Fund's members that it is better for it to retain its gold against unknown contingencies than to sell it and invest the proceeds elsewhere. The IMF's gold holdings have also recently been used to support the debt-relief programme for the heavily-indebted poor countries, and Ware argues that such activities demonstrate that gold is by no means an idle asset. He says that one of the reasons why so much gold is still held by the official sector reflects gold's earlier role as an explicit anchor for domestic and international monetary systems. While that role has changed in theory there is little desire on the part of many official holders to dispose of their gold. Countries such as the US, France, Germany and Italy continue to hold significant stocks. Gold is not a mere commodity, says Ware. "The major economic powers continue to hold - and see value in holding - gold in their reserves. "The IMF's undoubted credit-standing is also supported by the gold in its balance sheet. "Gold gives a monetary authority a degree of freedom on a different plane from that obtained by holding reserves in foreign currencies.
"Since no one can foresee what the next 50 years will bring to the international monetary system, the ability of the IMF to respond is paramount," maintains Ware. "At that stage gold might once again become a factor and both the IMF and its members would be pleased to have retained it," he concludes.