Turning over a golden leaf? Global liquidity and emerging market central banks’ demand for gold after the financial crisis

Gopalakrishnan, Balagopal; Mohapatra, Sanket

doi:10.1016/j.intfin.2018.07.002

Cited by 13 publications

(5 citation statements)

References 35 publications

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“…But that this may also affect the portfolio-allocation decisions of their reserve managers has not been noted previously. This negative effect is consistent with the view that reserve managers shift toward gold when returns on reserve currencies, notably the dollar, are low (Gopalakrishnan and Mohapatra 2018a).…”

Section: Liquidity Measuressupporting

confidence: 85%

“…In emerging markets, in contrast, gold holdings, after remaining flat in the opening years of the century, have trended strongly upward since the Global Financial Crisis. This may reflect low interest rates on major reserve currencies in the decade following the crisis, which diminished return differentials between securities and gold (Gopalakrishnan and Mohapatra 2018a). Or it may reflect gold reserves as perceived insurance against economic, financial and geopolitical risk.…”

Section: Trends In the Gold Share Of International Reservesmentioning

confidence: 99%

See 1 more Smart Citation

Gold as International Reserves: A Barbarous Relic No More?

Arslanalp¹,

Simpson-Bell²,

Eichengreen³

2023

IMF Working Papers

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Section: Liquidity Measuressupporting

confidence: 85%

Section: Trends In the Gold Share Of International Reservesmentioning

confidence: 99%

Gold as International Reserves: A Barbarous Relic No More?

Arslanalp¹,

Simpson-Bell²,

Eichengreen³

2023

IMF Working Papers

View full text Add to dashboard Cite

show abstract

“…Therefore, even if the VIX is high, GP is still at a low level. In addition, according to Gopalakrishnan and Mohapatra (2018), in developing economies and emerging markets, the amount of central bank gold reserves rises rapidly in the years following the 2008 worldwide financial crisis. It may be evidence that these countries have not yet appreciated the hedging role of gold before 2008, so GP will not rise with VIX.…”

Section: Resultsmentioning

confidence: 99%

Can Gold Hedge the Risk of Fear Sentiments?

Liu

Chang

et al. 2022

Technological and Economic Development of Economy

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This paper investigates the interaction between fear sentiments and gold price (GP) by utilising the full-sample and sub-sample rolling-window bootstrap causality tests. It can be observed that GP can hedge the risk of fear sentiments in a certain period. The result supports the inter-temporal capital asset pricing model, which demonstrates that the increase in fear sentiments can promote the rise in gold prices. Due to excessive panic, fear sentiments also have negative effects on GP. In contrast, GP positively impacts fear sentiments, which manifests that market sentiment can be forecasted based on changes in the gold market. In addition, the negative influences from GP to fear sentiments indicate there are diversified assets that can be alternatives to gold. In the complicated international environment and volatile market sentiments, investors can benefit by optimising their asset portfolio. The governments can mitigate the adverse effects of large fluctuations in both markets by grasping the movement of gold and fear sentiments.

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“…The surge in demand for gold by emerging market central banks after the 2008 financial crisis, as well as the decline in interest in G7 currencies in the post-crisis period should be seen in the broader context of the result of loose monetary policies pursued by advanced economies over the past few years (Gopalakrishnan and Mohapatra, 2018). The authors of this paper argue that the quantitative easing undertaken by central banks in advanced economies has led to the search for alternative safe assets such as gold, which may explain the continued accumulation of gold reserves even after the peak of the financial crisis.…”

Section: Methodsmentioning

confidence: 99%

Role of gold in Russia's modern monetary system

Ivanchenko¹,

Galazova²,

Zharkova³

et al. 2022

Sustainable and Innovative Development in the Global Digital Age

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The paper analyzes the reasons for the accelerated accumulation of gold in the structure of Russia's international reserves and the impact of this process on our country's monetary system. The purpose of the paper is to identify the prospects for increasing the role of gold as a collateral asset in the ruble money supply emission. The correlation and regression analysis of the most important macroeconomic variables of the money market, which should be influenced by gold quotations, was chosen as a method of research. The novelty of the paper is the justification of the pattern of accelerated gold accumulation in Russian international reserves. The review of foreign scientific literature has led to the conclusion that the increased role of gold in the international financial market is associated with an uncontrolled emission of currencies by the G7 countries in their pursuit of soft monetary policy. The paper presents the results of the calculation of the intrinsic value of gold and the impact of its stock in the Russian Central Bank vaults on the money supply in the country and the ruble exchange rate against the U.S. dollar. The authors conclude that the way out of the protracted global financial crisis may be a return of one or more major economies (not excluded, the U.S.) to the gold standard system.

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Turning over a golden leaf? Global liquidity and emerging market central banks’ demand for gold after the financial crisis

Cited by 13 publications

References 35 publications

Gold as International Reserves: A Barbarous Relic No More?

Gold as International Reserves: A Barbarous Relic No More?

Can Gold Hedge the Risk of Fear Sentiments?

Role of gold in Russia's modern monetary system

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