The agreements have been beneficial for all aspects of the gold market for producers, producers, investors and consumers, particularly in heavily indebted poor countries (HIPCs), some of which are major gold exporters. Central banks have also benefited from the agreements as a result of improved stability in the gold market and the market value of reserves. Central banks are committed to being stable market managers, especially when it comes to their own investment behaviour. The sudden and brutal fluctuations in the price of gold before the first CBGA show what a world without agreement could look like. The agreements have provided the gold market with much-needed transparency and a commitment from global central banks not to participate in uncoordinated wholesale gold sales. In total, at the end of 2018, central banks held about 33,200 tonnes of gold, or about one-fifth of the gold ever mined. In addition, these stocks are highly concentrated in the advanced economies of Western Europe and North America, a legacy of the days of the gold standard. This means that central banks have enormous price power in gold markets. 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 in one year. Since then, three other agreements have been concluded, in 2004, 2009 and 2014.
On 19 May 2014, the European Central Bank and 20 other European central banks announced the signing of the fourth central bank gold agreement. The agreement, which applies from 27 September 2014, has a five-year term and the signatories stated that they currently have no plans to sell large quantities of gold. For more information, click here. The World Gold Council welcomes the decision of European central banks to agree on a new central bank gold agreement (CBGA). The agreement, the fourth of its kind, highlights an ongoing commitment by some of the world`s largest gold reserve holders to maintain the clarity and transparency that this agreement offers to gold market players. It also strongly reaffirms the importance of gold as an asset in global monetary reserves.