In a notable shift in asset strategy, the Czech National Bank (ČNB) significantly increased its gold reserves in 2023, almost tripling the volume from the previous year. By the end of 2023, the central bank’s gold reserves reached an impressive 986,000 troy ounces, equivalent to 30.67 tons, with a total value of 45.7 billion korunas. This marked a substantial increase from the 385,000 troy ounces, approximately 11.97 tons, valued at 15.7 billion korunas at the end of 2022.

The surge in gold acquisitions by the ČNB became more pronounced in the second quarter of 2023, with sequential purchases of 1.5 tons, 6.1 tons, 5.5 tons, and 5.6 tons in each subsequent quarter. This departure from the previous strategy, where gold reserves fluctuated within the range of eight to 12 tons for an extended period, reflects a deliberate effort by the central bank to bolster its gold holdings.

Governor Aleš Michl has consistently advocated for the gradual increase of the ČNB’s gold reserves up to 100 tons. According to Michl, such an augmented gold reserve not only enhances the diversification of the central bank’s portfolio but also boosts overall yield. He emphasized that the ČNB is strategically building a golden treasure for future generations.

It’s noteworthy that a significant portion of the acquired gold is not physically located within the central bank’s buildings. Jan Kubíček, a bank board member, highlighted that the purchased gold is typically stored in foreign banks. This aspect underscores the complexities of modern banking systems and the interconnectedness of financial institutions on a global scale.

The substantial increase in the Czech National Bank’s gold reserves signifies a strategic move to strengthen its asset portfolio, aligning with broader economic considerations and future financial stability.

Article by Prague Forum