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If gold isn't money, then why do central banks have so much of it in their vaults?
by bcg1 11y ago
If gold isn't money, then why do central banks have so much of it in their vaults?
- ThrustVectoring 11y agoThey reasonably expect to be able to trade it for money, should they need to.
- bcg1 11y agoWhy don't they have stocks, diamonds, or any other types of valuables in their vaults?
- ThrustVectoring 11y agoUh, what? They do. The Chinese government owns approximately $60 billion worth of gold, and $1.2 trillion worth of US treasury bonds.
- bcg1 11y agoLet me rephrase... why don't they have anything other than gold or cash equivalents?
- ThrustVectoring 11y agoThey're very much risk-adverse (for good reason). In exceptional circumstances, they will take on other assets, though. See - the US Treasury's stake in General Motors.
- scrupulusalbion 11y agoStrictly speaking, money (as opposed to currency) is whatever is the most commonly used currency in a given region. Gold is not generally used as a medium of exchange anymore (i.e. it is not a currency), so it is merely a valuable commodity.