In the Federal Reserve and FDIC circulated a letter to banks that proposes to harmonize US regulatory capital rules with Basel III. BASEL III is an accord that tells a bank how much capital it must hold to safeguard its solvency and overall economic stability.
It´s a global standard on bank capital adequacy, stress testing, and market liquidity risk. Here´s the important bit:
At the top of the proposed changes is the new list of "zero-percent risk weighted items," which now includes "gold bullion" right after "cash."
That´s the part to take notice of. If the proposals are approved by regulators - and that seems likely since adoption of Basel III will be - then this is a momentous change for the gold market. Now banks will be allowed to hold bullion in their vaults and count it among their Tier 1 assets - in other words, the least risky assets.
That by itself would be bullish for the gold price, as banks that recognize gold´s unique characteristics seek to stockpile more of it.
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