Development and Finance from issue 2010/1

Iván Wiesel

Role of Gold in Today’s Global Economy

- Abstract -

There have been many attempts over the last seventy or more years to restore the monetary role of gold, but without success. There is no gold money or gold paper money anywhere in the world today. Nonetheless, gold has not been squeezed entirely from the official reserves of the central banks, and in fact, the central banks of many countries have actually increased the gold ratio in their reserves rather sharply. The fixed price of gold was abolished and the price even rises as gold production increases, in many cases faster than the rate of inflation. The demand to accumulate gold rose as the global crisis set in. Despite the lifting of restrictions on the gold price we have not seen full-scale demonetisation and central banks have not offloaded substantial parts of their gold reserves; in fact, many have increased them.

Iván Wiesel, PhD, economist

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