World Gold Council Key Highlights:

The proportion of central banks holding higher total reserves than five years ago has increased to 68% from 53% in 2020.The rebound was entirely concentrated in Emerging Markets and Developing Economies (EMDE) central banks, with 75% of EMDE respondents reporting higher total reserves compared to 53% last year.

“As a buffer against balance of payments crises” remains the most relevant reasons for total reserve growth, although the proportion has decreased from last year. “Cross border trade flows have grown”, “as a consequence of exchange rate policy”, and “as a backstop for the domestic financial system” all witnessed significant decreases as reasons for reserve growth.

“Negative interest rates” was rated as relevant by the highest number of respondents, tying with “uncertainty over the economic recovery following COVID-19” which was an option added this year. The strong reaction to both highlights the additional complexity for reserve managers stemming from the pandemic.

Respondents were mixed about the future role of the US dollar, with 50% saying the dollar will occupy a lower position than at present. This is similar to last year's result.

The future role of the euro also elicited mixed forecasts from respondents, with 64% saying that it will occupy a similar or lower proportion compared to its current position. The results are very similar to those in last year’s survey.