Gold replaces euro as second-largest reserve asset

Mit der Einführung des Bretton-Woods-Systems 1944 avancierte der US-Dollar zur weltweiten Leitwährung. Seine Stabilität wurde durch die Hinterlegung mit Gold garantiert. Selbst nachdem dieses With the introduction of the Bretton Woods system in 1944, the US dollar became the world’s reserve currency. Its stability was guaranteed as it was backed with gold. Even after this global monetary system was considered a failure due to the continuous expansion of fiat money (i.e. money without intrinsic value) and the enormous current account deficit of the US in the early 1970s, the US dollar remained the reserve currency and the most important foreign currency reserves component for central banks worldwide – even though the US dollar share has decreased by 14 per cent to 58 per cent over the last 20 years, according to Atlantic Council data.

Following Bretton Woods, gold reserves were reduced until 2007

After the ‘dollar/gold’ standard was abandoned in 1971, many central banks initially parted with some of their gold reserves before demand resurged with the global financial crisis of 2008. In the meantime, stable currencies such as the Deutsche Mark, Swiss franc, Japanese yen, British pound sterling and, from 2002 onwards, the European single currency euro, in particular, were in demand as reserve currencies for many central banks. With a share of up to 20 per cent, the euro was the most sought-after reserve currency after the US dollar for a long time.

Gold overtakes euro also due to massive price increases

According to recent Bank of America data, the fact that gold has now overtaken the European single currency as the second-largest reserve asset is partly due to many central banks’ long-lasting gold buying spree, which has multiple reasons. In view of the geopolitical trouble spots, gold is once again in high demand as a safe haven. Also, there are continuous efforts by emerging countries to reduce their dependency on the US dollar. A second and most likely decisive reason for the current weighting of gold in foreign currency reserves is the price development of the precious metal. It has appreciated by more than 40 per cent over the last twelve months.