Why does the Bank of England store gold?
Gold is an important asset of foreign exchange reserves. By providing safe gold custody we are supporting central bank reserve management and thus international financial stability.
London is the global centre for gold trading. We support financial stability by providing central banks with access to the liquidity of the London gold market. We also provide gold accounts to certain commercial firms that facilitate access for central banks to the London gold market.
Gold that we hold on behalf of our customers does not appear on our balance sheet. This is because we provide gold storage on an allocated basis, meaning that the customer retains the title to specific gold bars in our vaults, rather than a claim on the Bank for a certain weight of gold.
The following article, from the LBMA’s magazine “The Alchemist” features Victoria Cleland talking about the Bank’s role in the Gold market.
How much gold is kept in the Bank of England?