IMF to make central bank gold lending data more transparent

IMF to make central bank gold lending data more transparent

Dorothy Kosich
'23-JAN-07 08:00'
RENO, NV (Mineweb.com) --A Blanchard & Company study calling for greater transparency in central bank gold lending accounting has apparently helped to convince the International Monetary Fund to adopt a landmark accounting change in the way central banks account for gold loans.

The December 2006 study by Blanchard Vice President and Director of Economic Research Neal R. Ryan suggested that if more transparent governance was implemented in central bank gold lending, “gold prices will experience exponential growth because they will become a reflection of a fair and equitable market for all participants.”

“The IMF has essentially stated that they believe the market should receive correct accounting on loan information. The final test will be the implementation of the new accounting rules,” Ryan said at the time.

On Monday, New Orleans-based Blanchard announced that newly adopted IMF accounting changes mean that central banks will no longer include the amount of gold they have loaned and sold into the market as part of their reserve total assets,” according to Blanchard Chairman and CEO Donald W. Doyle, Jr.

Ryan declared that the IMF action “changes the entire landscape of the gold market for the betterment of all participants involved, because there is now data available that has never previously been published. A transparent market is a healthy market, and the gold market just got a lot healthier.” He added that it will take the IMF some time to institute the new accounting procedures.

Central banks have their purchases and sales of gold tallied by the IMF International Reserves and Foreign Currency Liquidity Statistics Department, and are updated every three months by the World Gold Council. Ryan asserted that while central banks report sales and purchases to the IMF, they do not report their levels of holdings on loans. He contends that “gold swaps between banks have just as large an impact on the market as gold loans, and even less is known about them in the marketplace.”

Blanchard is the largest U.S. retailer of American rare coins and precious metals. Its economic research unit provides precious metals market analysis for the financial and consumer media.

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