The United States and other industrialized countries in the euro area held large gold reserves – Addison
Bank of Ghana Governor Dr Ernest Addison said that in the days of the gold standard, currency issued by central banks had to be fully backed by gold, measured in troy ounces at the time.
This measure of the gold standard to gauge the strength of currencies, he said, was later abandoned around the turn of the 20th century, when economies began printing currencies without the backing of gold.
Since that transition, Dr Addison added, currencies have been backed by a variety of instruments, including gold, government bonds and stocks, and first-class bills of exchange.
“In fact, when Ghana issued its jurisdictional currency in 1958, the original currency backing assets for the currency issued included gold, pound sterling and UK call money and bills. from the British Treasury with maturities not exceeding three months, among others.
“The history of monetary management has revealed that while the gold in the reserve hedging mix did not hold much weight, the managers of the economy in fiscal year 1960-61 made the decision daring to increase the amount of gold to be held in the cover the composition of the assets of the Cedi.
“As a result of this decision, a small amount of refined gold, valued at approximately US $ 3.7 million at the time, was purchased overseas and transported to the vault of the bank. The fall in the value of gold in the 1960s prompted a policy shift from gold as a hedging asset to currencies and foreign securities, ”he said at the launch of the God Purchase program in June of this year.
He added: “The Bank of Ghana’s foreign exchange reserves have grown steadily over the past fifteen (15) years to reach current levels of nearly US $ 11.00 billion, but the share of gold reserves remained unchanged at 8.77 tonnes, with the average value of gold reserves held as a percentage of gross international reserves (GIR) at 6.14 percent.
“A cross-country comparison shows that unlike Ghana’s static gold holdings in its reserves, the United States and other industrialized countries in the euro area continued to hold large gold reserves after the era of the gold standard. According to the International Monetary Fund (IMF) and the World Gold Council, major industrialized countries held the largest volume of gold reserves in April 2021, followed by major emerging markets, with major developing countries lagging behind.
“Globally, central bank demand for gold over the past decade has ranked third behind the jewelry, technology and investment sectors.
“These trends are revealing as Ghana has been mining gold for over three centuries and most of the gold is exported. In 2019, for example, Ghana was ranked as Africa’s largest gold producer and 7th in the world. Yet in the same year, other central banks acquired a record high of 670 tonnes of gold to increase their reserves according to the World Gold Council. “