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Sustainability and Climate Risk Analysis of Gold as a Central Bank Reserve Asset

Author

Listed:
  • David Marczis

    (Magyar Nemzeti Bank)

  • Timea Karacsony

    (Magyar Nemzeti Bank)

  • Andras Straubinger

    (Magyar Nemzeti Bank)

Abstract

Gold is a precious metal with several functions: it has been widely used in jewellery for thousands of years, and, as it serves as a store of value and has other special financial properties, it is also used as an investment asset. Gold also plays a prominent role in central bank reserves, primarily as a safe-haven asset and diversifier. Climate change may have negative social and economic consequences, such as intensifying geopolitical tensions and rising inflation, which may increase demand for safe-haven assets, including gold. Considering the role gold plays in central bank reserves, it is important to understand its climate risk profile as well. In this paper, we assess the physical and transition risks of gold investments. The main message of our analysis is that gold as a final product is practically indestructible and therefore its physical risk exposure is negligible, but its transition risk profile cannot be clearly determined.

Suggested Citation

  • David Marczis & Timea Karacsony & Andras Straubinger, 2025. "Sustainability and Climate Risk Analysis of Gold as a Central Bank Reserve Asset," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 24(2), pages 73-97.
    • Handle: RePEc:mnb:finrev:v:24:y:2025:i:2:p:73-97
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    More about this item

    Keywords

    sustainability; climate risks; gold; gold reserve; central bank investments;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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