Fun

Czech Central Bank Plans Tenfold Increase in Gold Holdings, New Governor Says Precious Metal ‘Good for Diversification’

News Feed - 2022-06-05 01:06:29

Czech Central Bank Plans Tenfold Increase in Gold Holdings, New Governor Says Precious Metal "Good for Diversification"


The incoming governor of the Czech National Bank (CNB), Aleš Michl, has said he plans to increase the institution’s gold holdings almost tenfold from the current 11 tonnes to 100 tonnes. Michl also said he will ask the bank’s foreign exchange reserves management team to invest in stocks. Growing the CNB’s Shareholding


The incoming governor of the Czech National Bank (CNB), Aleš Michl, has said gold is good for diversification because “it has zero correlation with stocks.” Therefore, under his stewardship, the CNB hopes to increase its holdings of the commodity from the current 11 tonnes to 100 tonnes or even more. However, this will be done gradually, the incoming governor said.


With this plan, which sees the bank’s gold holdings grow by almost ten times, the new CNB boss, as one report noted, is seemingly following in the footsteps of other European central banks that have either repatriated or bought more tonnes of gold. For instance, the Hungarian central bank revealed in 2018 that it had grown its gold holdings tenfold while the Polish central bank is reported to have done the same in 2019.


Meanwhile, in his remarks during a wide-ranging interview with the Czech publication Ekonom, Michl, a conservative economist, also said he will propose to increase the CNB’s shareholding in stocks from the current 16 percent of reserves to 20 percent or more. He argued that central banks in Switzerland and Israel are already doing this and so are large state sovereign wealth funds.


A Profitable CNB


Concerning the management of foreign exchange reserves, Michl, who is set to begin his six-year tenure as governor on July 1, said he will encourage the management team to invest the reserves in stocks. When asked about the risks of using reserves this way, Michl responded: Yes, yield volatility would then be higher – that’s the risk. But the expected return, in the long run, would also be higher. Together with our CNB colleagues Michal Škoda and Tomáš Adam, we are trying to calculate this risk as part of a research project. My vision is to have a long-term profitable CNB.


Michl added that his goal is to make the expected returns on the CNB’s assets exceed the cost of the central bank’s liabilities. According to him, the CNB’s balance sheet and its income statement may seem unimportant to others, but are important to him.


Once the CNB starts to make a positive return, the generated profit will be used to “replenish the reserve fund and other funds created from the profit.” The surplus profit will be transferred to the state budget, Michl said. Tags in this story Aleš Michl, Balance Sheet, Czech National Bank, foreign exchange reserves, gold, stocks, Tomáš Adam, yield volatility


What are your thoughts on this story? Let us know in the comments section below. Terence Zimwara


Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route. Tesla CEO Elon Musk Has "Super Bad Feeling" About US Economy — Biden Responds ECONOMICS | 22 hours ago Soros Fund"s CEO: Recession Is Inevitable and Crypto Is Here to Stay ECONOMICS | 3 days ago


Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleEthereum’s Hashrate Surpasses Lifetime High as The Merge Gets Closer Next articleLayoffs Spread Across the Blockchain Industry as Bear Market Cycle Impacts Crypto Firms Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItOman to Incorporate Real Estate Tokenization in Virtual Assets Regulatory Framework


Real estate tokenization is set to be incorporated into Oman Capital Markets Authority (OCMA)"s virtual asset regulatory framework. According to an advisor with the authority, the tokenizing of real estate will open investment opportunities for local and foreign investors. Real ... read more.Tony Hawk"s Latest NFTs to Come With Signed Physical Skateboards Draft Law Regulating Aspects of Crypto Taxation Submitted to Russian Parliament Today"s Top Ethereum and Bitcoin Mining Devices Continue to Rake in Profits Survey: Adoption in Argentina Grows, With 12 out of 100 Adults Having Invested in Crypto

News Feed

Tom Mitchelhill3 hours ago‘Is this a Bitcoin ad?’ Joe Biden unknowingly touts BTC in coffee mug videoCrypto enthusiasts have lauded Joe Biden’s latest social media post for its so-called accidental endorsement of B
Bitcoin Exchange Outflows Continue To Rise: Investor Confidence At An All-Time High?
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Dogecoin Sights Rebound As RSI Hits Oversold Levels Near $0.3563
Este artículo también está disponible en español. Dogecoin is approaching a critical juncture as it hovers near the $0.3563 mark, with the Relative Strength Index (RSI),
Bandana Wearing Cryptopunk NFT Smashes Records Selling for $23 Million in Ethereum
Bandana Wearing Cryptopunk NFT Smashes Records Selling for $23 Million in Ethereum The Cryptopunks non-fungible token (NFT) collection has seen a new record as the NFT Cryptopunk #
Cryptocurrency Exchange Kucoin Raises $150 Million in Pre-Series B Funding Round, Reaches $10 Billion Valuation
Cryptocurrency Exchange Kucoin Raises $150 Million in Pre-Series B Funding Round, Reaches $10 Billion Valuation Kucoin, a Seychelles-based cryptocurrency exchange, has announced it
Binance Obtains In-principle Approval to Operate With Cryptocurrencies in Kazakhstan
Binance Obtains In-principle Approval to Operate With Cryptocurrencies in Kazakhstan Crypto exchange Binance has been granted preliminary approval to offer trading and custody serv
Venture Capitalist Tim Draper Explains Why Bitcoin Will Soar Past His $250K Estimate
Venture Capitalist Tim Draper Explains Why Bitcoin Will Soar Past His $250K Estimate Venture capitalist Tim Draper has doubled down on his bitcoin price prediction of $250,000 by t
Anonymous Hacks Major Belarusian Government Websites
Anonymous Hacks Major Belarusian Government Websites The websites of several ministries of Belarus have allegedly been taken down in a new attack, part of the cyberwar Anonymous is
Altcoin Market Decline Reaches Final Act, Bottom Expected In 2025–Analyst
Este artículo también está disponible en español. After enjoying a mini price run in the last week of October, Bitcoin’s price has corrected below $68k to start the fir
Chinese State-Run Media Warns About Bitcoin’s Price Falling to Zero as Regulators Issue Fresh Crypto Warning
Chinese State-Run Media Warns About Bitcoin"s Price Falling to Zero as Regulators Issue Fresh Crypto Warning A Chinese state-run newspaper has published an article warning about bi
Tristan Greene5 hours agoEU parliament votes overwhelmingly in support of DAC8 crypto tax reporting ruleThe measure received 535 votes for with 57 against and 60 abstentions in a plenary session.2000 Total views43 Total
Facebook Buys Stake in Reliance Jio — How the Deal Affects Cryptocurrency in India
Facebook Buys Stake in Reliance Jio — How the Deal Affects Cryptocurrency in India Facebook is buying a stake in Reliance Jio, India’s largest telecom operator. The deal has