According to data from the National Bank of Romania (NBR), the official gold holdings of the country amount to 103.6 tons. Of this, about 61 tons (or 59%) are held in the vaults of the Bank of England. With this quantity, Romania ranks 39th globally in terms of international gold reserves and sixth in the Eastern European region. The main purpose of holding gold is to preserve the purchasing power of money, while also serving as a tool for maintaining independence from global financial market infrastructures, according to experts at Tavex, the largest investment gold trader in Northern Europe and a major player in the Romanian and South-Eastern European market.
When comparing the value of gold held to total international reserves, the precious metal accounts for 12% of Romania's international reserve portfolio. Since the introduction of the new Romanian leu in 2005, this value has fluctuated constantly between 6.24% and 14.14%. Despite these variations, actual gold holdings have changed very little in quantitative terms. Fluctuations are mainly driven by changes in international gold prices and shifts in other assets held, such as government securities. As the price of gold has increased by 25% this year alone, it is understandable that its share in total reserves has grown.
"The International Monetary Fund recommendations suggest that gold should represent about 10% of a country's total international reserves. As a recommendation, there are deviations ranging from 0% (as in Canada, Norway, or Croatia, which hold no gold) to 75% (countries like Uzbekistan, Portugal, the USA, and Germany). In line with these recommendations, the National Bank of Romania maintains this ratio. However, in a world where public and private debt is constantly increasing – with global debt now at 333% of global GDP – and at an increasingly rapid pace, we should ask whether a reserve consisting of only 10-12% gold is sufficient to cover the claims of various parties on fixed-income financial assets (government bonds, corporate bonds, bank deposits, etc.)," said Victor Dima, Manager of the Treasury Department of Tavex Romania.
This year was also marked by interest rate cuts aimed at stimulating lending to save economies from crisis, and the value of newly issued government bonds is lower compared to those issued at record-high interest rates.
Nevertheless, the National Bank of Romania did not consider it necessary to expand its gold holdings, the last purchase being made in 2002, as the NBR's declared aim is to keep the exchange rate between the leu and the euro stable, which is not synonymous with strengthening the value of the Romanian leu. The most common reasons for central banks to hold international reserves are: to provide a fund in case of emergencies, to use the assets for the implementation of monetary policy, but also to use these reserves as an anchor for the value of the currency issued by the central bank.
