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MUFG Bank is Japan’s largest bank and one of the world’s largest, with offices throughout Japan and in 40 other countries.
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Gold holdings by BANK OF ENGLAND
BANK OF ENGLAND only accept bars which comply with London Bullion Market AssociationOpens in a new window (LBMA) London Good Delivery (LGD) standards. LGD bars must meet a certain minimum fineness and weight. A typical gold bar weighs around 400 troy ounces (12.4kg).
The LBMA invites the Bank to observe discussions at its Board which are relevant to the Bank’s custodial function. The Bank is not a member of the LBMA nor its board and has no regulatory responsibilities for the gold market. Its role is limited to matters affecting its gold custodial responsibilities. To support its role, the Bank also observes at the LBMA’s Physical Committee and attends its working group.
Why does the Bank of England store gold?
Gold is an important asset of foreign exchange reserves. By providing safe gold custody we are supporting central bank reserve management and thus international financial stability.
London is the global centre for gold trading.BANK OF ENGLAND support financial stability by providing central banks with access to the liquidity of the London gold market. We also provide gold accounts to certain commercial firms that facilitate access for central banks to the London gold market.
Gold that BE hold on behalf of THEIR customers does not appear on BE balance sheet. This is because BE provide gold storage on an allocated basis, meaning that the customer retains the title to specific gold bars in BE vaults, rather than a claim on the Bank for a certain weight of gold.
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The Bank Of England has a long history and a very important role in the financial system. can you say a little more about its role with regards to gold?
Gold has been an important aspect of the Bank’s role since we were founded in 1694 (we are celebrating our 325th birthday this year, alongside the centenary of the first London Gold Price), reflecting gold’s significance within official foreign exchange reserves. The Bank opened a purpose-built London vault in 1697 in response to the first significant gold rush. This saw an influx of gold from Brazil to London. The Bank’s ‘bullion warehouse’ served the entire European market, and the subsequent gold rushes in California, Australia and South Africa led to the storage of even more gold in the Bank’s vaults.
Today (a sunny day in early September 2019), we hold around 400,000 gold bars in our vaults, currently worth approximately £200 billion, making up 15% of official declared gold reserves globally. We are the largest gold custodian in the UK – we hold over 65% of the gold in London.
Today (a sunny day in early September 2019), we hold around 400,000 gold bars in our vaults, currently worth approximately £200 billion, making up 15% of official declared gold reserves globally. We are the largest gold custodian in the UK – we hold over 65% of the gold in London. [LMBA Resource]
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Price stability is a critical element of a favourable environment for living and doing business, since it:
- Protects incomes and savings in the national currency from unpredictable depreciation, which helps maintain living standards and plan daily and long-term expenses with greater confidence.
- Protects low-income households primarily purchasing low-priced basic goods. Sustainably low inflation helps maintain consumption levels.
- Contributes to higher affordability of borrowing for companies by decreasing the inflation premium included by banks in their interest rates.
- Simplifies financial and investment planning for businesses.
- Increases confidence in the national currency and creates favourable conditions for reducing the proportion of foreign currency-denominated assets and liabilities in the economy. In turn, this decreases the impact of changes in the external environment on the economy.
Main principles of monetary policy
In order to achieve the inflation target, the Bank of Russia implements monetary policy within the inflation targeting regime. The consistency, predictability and transparency of the central bank’s actions are crucial in pursuing monetary policy. Therefore, the Bank of Russia’s monetary policy is based on a range of principles.
- The Bank of Russia sets a permanent public quantitative inflation target for households, businesses and financial market participants to be able to factor in this indicator when planning their activity and making decisions. The inflation target is set for the annual growth rate of consumer prices, that is, the change in prices for goods and services purchased by households over the last 12 months.The goal of the Bank of Russia’s monetary policy is to maintain annual inflation close to 4% on a continuous basis. The wording ‘close to 4%’ implies that inflation may slightly fluctuate around the target.
More details on inflation
In the case of a significant deviation of inflation form the target, the Bank of Russia assesses the reasons for and the duration of the deviation in order to make appropriate decisions on monetary policy measures that would help bring inflation back to the target.
- The inflation targeting regime involves a floating exchange rate determined by supply and demand in the currency market. Under the floating exchange rate regime, the Bank of Russia carries out no interventions in the domestic foreign exchange market to maintain any specific exchange rate or the pace of its movements. That said, the Bank of Russia may conduct foreign currency transactions in the domestic market in the case of a threat to financial stability, as well as to replenish (tap) foreign currency reserves based on the fiscal rule being implemented by Russia’s Ministry of Finance.
More details on the floating exchange rate policy
- The key rate is the main instrument of the Bank of Russia’s monetary policy.Changing the key rate, the Bank of Russia influences the movement of interest rates in the economy, which in turn impacts domestic demand and inflation.
More details on how the Bank of Russia influences inflation
The Bank of Russia Board of Directors makes its key rate decisions on a regular basis, specifically eight times a year, in accordance with the pre-approved and publicly available schedule.
More details on how monetary policy decisions are madeAny key rate decision is accompanied by an explanation of its logic and reasons, and, generally, by a signal regarding possible further monetary policy moves. The Bank of Russia’s explanation of its decisions and future intents is an important instrument for managing inflation expectations, that is, for what is called anchoring of inflation expectations to the target.
The anchoring of the inflation expectations of both households and businesses to the inflation target is crucial to ensure the efficiency of measures being implemented by the central bank.
- The Bank of Russia makes its monetary policy decisions relying on the macroeconomic forecast and the analysis of a wide range of data. The effect of monetary policy on price dynamics is not immediate: it takes time and involves a long chain of interconnections. Therefore, the assessment of the effect of a key rate decision on the economy and inflation requires a macroeconomic forecast.The Bank of Russia’s forecasts are based on up-to-date macroeconomic models. In preparing a macroeconomic forecast, the Bank of Russia estimates the duration of factors impacting the economy and price movements, and the stability of the existing economic trends.Measures pursued in other areas of domestic economic policy, as well as measures of economic policy in major foreign states are important factors the Bank of Russia considers when building its macroeconomic forecast.
When formulating assumptions for the macroeconomic forecast and assessing existing risks, the Bank of Russia relies on a conservative approach, focusing on proinflationary factors and risks. This is associated with the fact that inflation expectations in Russia currently remain elevated and sensitive even to a temporary rise in prices for individual products. In such a situation, underestimation of proinflationary factors and risks may entail persistent and long-lasting deviations of inflation upwards from the target.
- The Bank of Russia follows the principle of monetary policy transparency so as to enhance the understanding of and confidence in its current monetary policy and to create a predictable economic environment for all economic agents. The understanding of and confidence in the measures being implemented are critical for enhancing their efficiency.Within its transparency policy, the Bank of Russia first and foremost seeks to promptly and to the fullest extent possible communicate information on the goals, principles, measures and results of its monetary policy, as well as on the assessment of the economic situation and its prospects. The Bank of Russia also takes efforts to improve the outreach of its monetary policy and to make the communication more targeted.
More details on how the Bank of Russia communicates its decisions
SOURCE: Bank of Russia -
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Article 75 of the Constitution of the Russian Federation establishes the special legal status of the Central Bank of the Russian Federation, gives it the exclusive right to issue currency (Part 1) and to protect the ruble and ensure its stability, which is its main function (Part 2). The status, goals, functions and powers of the Bank of Russia are defined by Federal Law No. 86-FZ, dated 10 July 2002, ‘On the Central Bank of the Russian Federation (Bank of Russia)’ and by other federal laws.
According to Article 3 of the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’, the goals of the Bank of Russia are: to protect the ruble and ensure its stability; to develop and strengthen the banking system of the Russian Federation, to ensure stability of and develop the national payment system, and to develop the financial market of the Russian Federation and ensure its stability.
Bank of Russia performs the following functions:
- in collaboration with the Government of the Russian Federation, it elaborates and pursues a single state monetary policy;
- in collaboration with the Government of the Russian Federation, it elaborates and pursues a policy of developing and ensuring the stable functioning of the financial market of the Russian Federation;
- it is the sole issuer of cash money and organiser of cash turnover;
- it approves the graphic representation of the ruble as the currency sign;
- it is the last-resort creditor for credit institutions, and it organises the system to refinance them;
- it sets the rules to effect settlements in the Russian Federation;
- it exercises supervision and oversight over the national payment system;
- it sets the rules for conducting banking operations;
- it effectively manages the international reserves of the Bank of Russia;
- it adopts decisions on the state registration of credit institutions, it issues banking licences to credit institutions, suspends and revokes them;
- it adopts decisions on the state registration of non-governmental pension funds;
- it exercises supervision over the activities of credit institutions and banking groups;
- it exercises regulation, control and supervision over the activities of non‑bank financial institutions in compliance with federal laws;
- it exercises regulation, control and supervision over professional services provided in the financial market in compliance with federal laws;
- it registers the issues of issue-grade securities, securities prospectuses and reports on the results of the issuance of issue-grade securities;
- it exercises control and supervision over compliance by issuers with the laws of the Russian Federation on joint-stock companies and securities;
- it exercises regulation, control and supervision in the area of corporate relations in joint-stock companies;
- it conducts, on its own behalf or on behalf of the Government of the Russian Federation, all kinds of banking operations and other transactions necessary for the performance by the Bank of Russia of its functions;
- it organises and exercises foreign exchange regulation and foreign exchange control pursuant to the legislation of the Russian Federation;
- it sets the procedure for effecting settlements with international organisations, foreign states, legal entities and individuals;
- it approves industry accounting standards for the Bank of Russia, credit institutions, non-bank financial institutions, credit history bureaus and credit rating agencies, the chart of accounts for the accounting of the Bank of Russia and the procedure for using the chart, the charts of accounts for the accounting of credit institutions, non-bank financial institutions, credit history bureaus and credit rating agencies and the procedure for using the charts;
- it sets and publishes the official exchange rates of foreign currencies against the ruble;
- it takes part in preparing a forecast of the Russian Federation balance of payments;
- it takes part in the development of a methodology for compiling the Russian Federation financial account in the system of national accounts and organises the compilation of the Russian Federation financial account;
- it compiles the balance of payments of the Russian Federation, international investment position of the Russian Federation, statistics on external trade of the Russian Federation in services, external debt of the Russian Federation, the international reserves of the Russian Federation, direct investment in the Russian Federation and direct investment of the Russian Federation abroad;
- in order to compile the balance of payments of the Russian Federation, the international investment position of the Russian Federation, statistics on external trade of the Russian Federation in services, external debt of the Russian Federation, the international reserves of the Russian Federation, direct investment in the Russian Federation and direct investment of the Russian Federation abroad, it develops on its own and approves a statistical methodology, a list of respondents, the forms of federal statistical observation, the procedure and forms for the respondents to compile and submit primary statistical data according to these forms;
- it analyses and forecasts the state of the Russian economy and publishes relevant materials and statistics;
- it effects Bank of Russia payments on household deposits with bankrupt banks not covered by the mandatory deposit insurance system in the cases and according to the procedure stipulated by the federal law;
- it is the depository of the IMF ruble-denominated funds and it conducts operations and transactions stipulated by the IMF Articles of Agreement and the agreements concluded with the IMF;
- it exercises control over compliance with the laws of the Russian Federation on countering the illegal use of insider information and market manipulation;
- it protects the rights and legitimate interests of shareholders and investors in financial markets, insurance policyholders, insured persons and beneficiaries acknowledged as such pursuant to insurance legislation, and also insured persons under compulsory pension insurance, non-governmental pension fund depositors and participants under non-governmental pension plans;
- it organises the provision of the services to transmit electronic messages on financial operations;
- in collaboration with the Government of the Russian Federation, it implements measures aimed at improving financial literacy among individuals and small and medium-sized enterprises of the Russian Federation;
- in collaboration with the Government of the Russian Federation, it develops and implements a policy of improving financial inclusion for individuals and small and medium-sized enterprises of the Russian Federation;
- it assesses the size (level) of risk of suspicious transactions that might be conducted by credit institutions, credit institutions’ clients — legal entities (other than credit institutions, state and municipal authorities) (individual entrepreneurs) registered in accordance with Russian laws;
- it fulfils other functions in compliance with federal laws.
BANK OF RUSSIA RESOURCE
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