Central Bank Gold Agreement 1999

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In recognition of this, the major European central banks signed the Central Bank Gold Agreement (CBGA) in 1999, which limits the amount of gold that signatories can sell jointly in one year. Since then, three other agreements have been concluded, in 2004, 2009 and 2014. The Central Bank Gold Agreement (CBGA), also known as the Washington Agreement on Gold, is an agreement that governs the official sale of gold. The original version of the agreement was signed in Washington, D.C on September 26, 1999. As part of the agreement, the European Central Bank, the Swiss National Bank and 13 other European central banks have committed to limiting sales to 2,000 tonnes over five years (400 tonnes per year). Over the next two decades, prices rose from less than 300 $US an ounce to a peak of nearly $2,000 in 2011, while central banks shifted from net sellers of gold to net buyers. „The independence of the Central Bank is enshrined in law in many countries and central bankers tend to be independent thinkers. It is worth wondering why such a large group of them decided to join this very unusual agreement. At the same time, thanks to our close contacts with central banks, the Council has learned that some of the largest holders have been concerned for some time about the impact of unfounded rumours on the price of gold – and therefore on the value of their gold reserves – and on the use of official gold for speculative purposes. In 2009, the agreement between 19 central banks (the previous list of signatories was renewed by the central banks of Cyprus, Malta, Slovakia and Slovenia) was extended for a further period of five years, this time with a quota of 400 tonnes per year (the outbreak of the 2007-2008 financial crisis reduced the trend towards gold sales). The gold purchase rate (GOFO) is the exchange rate for the exchange of gold-us dollars. It`s not the price of gold, it`s the price of exchanging gold for US dollars. In other words, it is a course that someone is willing to exchange gold for the greenback.

You can imagine GOFO as the interest rate of a U.S. dollar loan secured by gold as collateral. Since a swap can be described as a set of futures contracts, the Gold Forward offered rate is similar to the gold rate and can be interpreted as a difference between the United States. . . .


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