Last year, the Czech National Bank (ČNB) nearly tripled the volume of gold in its reserves, showcasing a significant shift in its asset strategy. By the end of the year, the reserves reached a whopping 986,000 troy ounces, equivalent to 30.67 tons. This impressive volume of gold held in reserve amounted to a value of 45.7 billion korunas, according to the data on the structure of foreign exchange reserves published by the central bank.
In comparison, at the end of 2022, the central bank had 385,000 troy ounces of gold in its balance sheet, roughly 11.97 tons, with a value of 15.7 billion korunas. The ČNB’s activity in purchasing gold significantly increased from the second quarter of last year. While it bought about 1.5 tons of gold in the first quarter, the subsequent quarters saw it buying 6.1 tons, 5.5 tons, and 5.6 tons, respectively.
The central bank began buying gold on a larger scale last year, a departure from its previous strategy, where the volume of gold reserves fluctuated slightly but remained within the range of eight to 12 tons for a long time.
Governor of ČNB, Aleš Michl, has repeatedly stated in the past that the gold reserve of the central bank should gradually increase up to 100 tons of gold. According to him, such a volume of gold would improve the diversification of the reserve portfolio and simultaneously increase its yield. Michl also stated that the ČNB is building a golden treasure for future generations.
Interestingly, most of the gold purchased by the ČNB is not physically located in its buildings. Jan Kubíček, a bank board member, previously pointed out that the purchased gold is typically stored in foreign banks. This intriguing fact highlights modern banking systems’ complexities and financial institutions’ global interconnectedness.