Gold Continues to Play Critical Role in China’s Monetary and Financial System: Leading Chinese Economist

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A leading Chinese economist from one of the country’s top tertiary institutions has highlighted the irreplaceable role of gold in China’s modern monetary and financial system.

“Gold is an extremely ancient and important financial asset, and has played a unique role in the overall history of financial evolution,” said Zhang Xiaoyan (张晓燕), professor from Tsinghua University’s Wudaokou Institute of Finance, at the “China International Gold Investment Forum” (创变2022——中国(北京)国际黄金投资论坛) held in Beijing on 21 September.

“To this day, gold is still an important form of reserve money for the central banks of various countries, and is a final payments medium for international settlements.

“It also plays an important role in China’s central bank monetary policy and the opening and reform of its forex markets.”

Fan Shaokai (樊少凯) from the China Gold Association (CGA) said that gold reserves held by central banks account for around one-fifth of the metal discovered, and that central bank gold purchases account for around 10 – 15% of annual demand.

“However, the importance of central banks on the gold market isn’t just because of their large-scale holdings of gold reserves…it’s also because they are indicative investors,” Fan said.

The investments of central bank reserves can hint at global macro-economic condition, market trends and geopolitical risk.”

“Gold is the only non-debt monetary asset,” said Zhang Yongtao (张永涛), chief-secretary of the CGA. “It plays an irreplaceable role during financial crisis, war and disaster, and in the protection of financial security.

“Amidst the various uncertainties of today’s world, and the daily increase of insecure factors, gold can fulfil the strategic mission of dealing with uncertainty and searching for security.

“Gold reserves enable countries to have greater sovereign independence and independence of action during crises…in future the advantages of the monetary nature and the intrinsic stable value of gold will become even more apparent.”