Antonio Fazio: The relationships between currencies and gold
Speech by Mr. Antonio Fazio, Governor of the Bank of Italy, at the World Gold Council International
Conference “The Euro, the Dollar and Gold”, held in Rome on 17 November 2000.
"...The gold reserves of the central banks today amount to some 32,000 tons, about one quarter of the world stock.
Like other real assets, gold can appreciate when there is widespread inflation, which remains a threat. Gold’s importance as a monetary anchor came to an end with the emergence of more rigorous monetary policies in the 1980s and especially the 1990s. But in periods of crisis gold can constitute a sort of reserve or guarantee “of last resort” for a country, as Italy demonstrated during the 1970s. This view appears to be shared by the central banks of the leading industrial countries; when they signed the September 1999 agreement, they stated that gold continued to have an important role to play in the management of global reserves.
It is up to economists to analyze whether and to what extent, in an international monetary system that has surely not yet become fully consistent in many of its parts, reference to gold, which performed a monetary function for thousands of years, can still contribute, in the decades ahead, to preserving that fundamental condition for orderly economic activity - price stability.
The experience of the period following the Second World War shows that macroeconomic stabilization has always provided the basis for the growth of the most successful economies. Conserving this stability and the soundness of economies’ fundamentals is one of the principal tasks of governments and central banks..."