Gold reserve
Gold reserve the amount of gold held by a national bank, used for dealing with the national banks of other countries.
A gold reserve is the amount of gold held by a central bank.
A gold reserve is a fund of gold bullion or coin held by a government or bank, as distinguished from a private hoard of gold held by an individual or non-financial institution.
In the past, reserves were accumulated by rulers and governments primarily to meet the costs of waging war. In most eras, governmental policy greatly emphasized acquiring and holding “treasure.” Banks accumulated gold reserves to redeem their promises to pay their depositors in gold.
During the 19th century, banks supplanted governments as the principal holders of gold reserves. Commercial banks received deposits subject to repayment in gold on demand and issued notes (paper money) that were redeemable in gold on demand; hence each bank had to hold a reserve of gold coins to meet redemption demands. Over time, however, the predominant portion of the gold reserves shifted to central banks. Because notes of the central bank wholly or primarily replaced the notes of commercial banks, the commercial banks needed little or no gold for note redemption. The commercial banks also came to depend upon the central bank for gold needed to meet the demands of their depositors.
In the 1930s, many governments required central banks to turn over all or most of their gold holdings to national treasuries. For example, in the United States, the Gold Reserve Act of 1934 stipulated that the U.S. Treasury should take title to all gold coin, gold bullion, and gold certificates held by the central Federal Reserve banks, giving gold certificates of a new type and gold credits on its books in exchange. The U.S. Treasury placed most of its gold reserve at Fort Knox, Ky. But not all governments “nationalized” gold, resulting in the status of gold reserves varying from country to country. In some countries, monetary gold reserves are held exclusively by the national government; in others, they are mainly held by the central bank; in others, they are held partly by the government and partly by the central bank.
Regardless of the holder, however, the use of gold reserves is now limited almost exclusively to the settlement of international transactions—and, even then, only rarely.
Gold reserve. Cambridge Dictionary | English Dictionary, Translations & Thesaurus. URL: https://dictionary.cambridge.org/dictionary/english/gold-reserve
Gold reserve | economics. Encyclopedia Britannica. URL: https://dictionary.cambridge.org/dictionary/english/gold-reserve