Gold Reserves at the International Monetary Fund
At its core, the IMF currently holds 90.5 million ounces of gold accumulated through Members’ initial subscriptions and subsequent increases, and other sources.
At the initial establishment of the IMF, South Africa requested one of five gold depositories be located within its borders – but this request was ultimately denied.
How did the IMF get its gold?
Historically, the IMF has funded its operations with income earned from member countries’ interest payments on borrowings to it. When the global economic crisis in mid-2000s caused lending levels to decline sharply, its Executive Board approved a “new income model” which includes selling some of its gold reserves.
IMF gold depositories can be found in New York, London, Paris, Shanghai and Bombay – these locations were chosen based on where its founding nations had the highest quota shares at that time; South Africa made an initial request but its share declined too quickly for inclusion.
The IMF may sell some of its gold holdings on the open market and at current prices; any sale requires approval by at least 85 percent of its Executive Board. Gold may also be accepted as repayment of loans from member countries, although any transactions involving buying or lending metal to leverage its high market value cannot occur.
What is the IMF’s gold policy?
Gold holdings of the IMF provide significant strength to its balance sheet and serve as an insurance against potential creditor claims. It has a long tradition of using its gold for financial use.
The IMF’s proposed sale of gold to raise resources for subsidy resources is within its authority and consistent with its new income model, approved by its Executive Board in April 2008. Furthermore, proceeds will assist in strengthening IMF capacity to offer concessional lending to low-income countries.
However, IMF gold sales could take place without disrupting global markets and are already one of the world’s largest official holders of gold – not to mention their experience facilitating purchases from member countries. Furthermore, their Catastrophe Contingency and Relief Trust (CCRT) needs replenishment urgently – taking only 4 percent of IMF gold reserves would suffice – well within what would require 85% Executive Board approval for sale by IMF.
What is the IMF’s gold holdings?
IMF holds approximately 90.5 million ounces (2,814 tons) of gold at designated depositories – which represents nearly one-tenth of their total financial assets.
From 1946 through the late 1970s, IMF gold reserves were built up through Members’ initial subscriptions, increases, and other transactions. Gold also flowed back out as members sold it back as payment for restitutions or debt repayments.
At its inception in 1944, members paid 25 percent of their initial quota subscriptions in gold, with further gold payments accompanying quota increases over subsequent decades.
Gold allows the International Monetary Fund (IMF) to diversify its portfolio and reduce exposure to currency or asset class value fluctuations, serving as a symbol of its commitment to global stability, and an integral component of its unique financing mechanism. BullionVault’s data from IMF International Financial Statistics tracks reported gold purchases by central banks and other official bodies around the world.
What is the IMF’s gold investment strategy?
Gold’s place in global monetary systems has changed since Bretton Woods collapsed and floating exchange rates became prevalent; however, central banks continue to own it, while key international institutions like IMF maintain substantial holdings of it.
In 2009, the International Monetary Fund sold 403.3 metric tons (almost 13 million ounces) of gold to secure financing to strengthen their finances and meet their mission of global financial stability, economic growth, poverty reduction, and improved living standards for all people. The sale was conducted according to an income model approved by their Executive Board in April 2008.
The IMF is using proceeds from its gold sales to establish an endowment fund and support low-income countries through the Poverty Reduction and Growth Trust (PRG Trust). Any remaining gold is invested in short-term official deposits to generate investment income.
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