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Global Crisis And The Demand For Gold By Central Banks: A Review Essay With Reference To India

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  • A. KARUNAGARAN

    (Department of Economic and Policy Research (DEPR), Reserve Bank of India, Central Office Building, 7th Floor, Fort, Mumbai 400001, India)

Abstract

When India purchased 200 tons of gold in October 2009, it was perceived, inter alia that it may spur the demand for gold by many central banks and the price may further escalate. This paper examines the general trend among the central banks' demand for gold in the wake of the recent global financial crisis. In that context, the paper focuses on whether India's purchase of gold was an appropriate reserve management strategy and if it affected the gold price trends. Related issues such as optimum size of gold in foreign reserves and the rationale of central banks buying gold with special reference to the global crisis are also addressed.

Suggested Citation

  • A. Karunagaran, 2013. "Global Crisis And The Demand For Gold By Central Banks: A Review Essay With Reference To India," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 1-18.
    • Handle: RePEc:wsi:jicepx:v:04:y:2013:i:01:n:s1793993313500063
    DOI: 10.1142/S1793993313500063
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    References listed on IDEAS

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    1. Reserve Bank of India, 2007. "Foreign Exchange Reserves," Working Papers id:1096, eSocialSciences.
    2. Dipak Ghosh & Eric Levin & Robert E Wright & The Centre for Economic Policy Research, "undated". "Gold as an Inflation Hedge?," Working Papers Series 96/10, University of Stirling, Division of Economics.
    3. Barry Eichengreen, 2005. "Sterling's Past, Dollar's Future: Historical Perspectives on Reserve Currency Competition," NBER Working Papers 11336, National Bureau of Economic Research, Inc.
    4. Brodsky, David A. & Sampson, Gary P., 1980. "The value of gold as a reserve asset," World Development, Elsevier, vol. 8(3), pages 175-192, March.
    5. Jukka Pihlman & Han van der Hoorn, 2010. "Procyclicality in Central Bank Reserve Management: Evidence from the Crisis," IMF Working Papers 2010/150, International Monetary Fund.
    6. Mr. Shaun K. Roache & Mr. Marco Rossi, 2009. "The Effects of Economic News on Commodity Prices: Is Gold Just Another Commodity?," IMF Working Papers 2009/140, International Monetary Fund.
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    More about this item

    Keywords

    Central banks; central banking policies; foreign exchange reserves; global financial crisis; E5; E58; F31; G01;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G01 - Financial Economics - - General - - - Financial Crises

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