China has ended six years of concealing its gold reserves, announcing a 57% rise in its hoard which puts it in the top five with the largest stash of the precious metal.
According to the People’s Bank of China, bullion assets totaled 3.31 million troy ounces or about 1,658 metric tons at the end of the June.
The US has the biggest reserves put by the World Gold Council at 8,133.5 tons followed by Germany, Italy and France. The jump in the gold holdings means China has overtaken Russia and Switzerland in terms of reserves.
China has been calling on the International Monetary Fund to recognize its yuan as an official reserve currency like the US dollar. The institute, which is under the American influence, is resisting the demand.
Washington is wary of Beijing’s growing financial clout and the serious challenge which the dollar faces as some of the emerging economies are switching to national currencies in their trade.
“China has ambitions to create a global reserve currency to challenge the hegemony of the US dollar and fill the void created by the declining holdings by central banks of the euro,” financial information website MarketWatch quoted Sharps Pixley CEO Ross Norman as saying.
China is the world’s largest producer of gold which has a prominent role in the global financial system as a bank reserve asset. India, another emerging economy, is the world’s largest consumer of the precious metal.
Gold holdings are a secure alternative for a country to diversify its foreign-exchange reserves and boost its currency profile. Many countries regard the metal as a buffer against volatile currency movements.
Nations around the world are expanding their gold reserves as the dollar and euro are standing on a shaky ground more than ever.
Russia, at odds with the West, has more than tripled its gold stockpiles since 2005 as it is pushing for currencies other than the dollar in its transactions.
The announcement is also a boost to China’s stock market which has dipped recently, sparking fears of a growth slowdown.
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