tag:blogger.com,1999:blog-538730199298720474.post1752071829709511970..comments2023-07-18T12:32:15.950+03:00Comments on Monetary research, official sources and relevant material: OECD - REPURCHASE AGREEMENTS, SECURITIES LENDING, GOLD SWAPS AND GOLD LOANS: AN UPDATE@mortymer001http://www.blogger.com/profile/13047624328777522777noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-538730199298720474.post-17890691572935623352011-07-19T12:29:54.758+03:002011-07-19T12:29:54.758+03:008. Gold swaps are usually undertaken between monet...<i>8. Gold swaps are usually undertaken between monetary authorities. The gold is exchanged for foreign exchange deposits (or other reserve assets) with an agreement that the transaction be unwound at an agreed future date, at an agreed price. The monetary authority acquiring the foreign exchange will <b>pay interest on the foreign exchange received</b>. Gold swaps are typically <b>undertaken when the cash-taking monetary authority has need of foreign exchange</b> but <b>does not wish to sell outright its gold holdings</b>. In that manner, <b>gold is a leveraging device</b>. Gold swaps <b>sometimes involve transactions where one of the parties is not a monetary authority</b> (usually it is another depository corporation). Gold swaps <b>between monetary authorities</b> do not usually involve the <b>payment of margin</b>.</i><br /><br />- I am now thinking about the "swaps" the Fed arranged with various other CBs at the height of the crisis. I am wondering... did they ever say that the Fed swapped dollars for other currencies, or perhaps it was actually gold they swapped dollars for?<br /><br />- It clearly says that monetary authorities don't typically charge each other a margin, which implies to me non-monetary authorities have to pay margin to play.<br /><br /><br /><i>11. The statistical implications of gold swaps and gold loans/deposits are complex and have not been<br />fully worked through. Work is still being undertaken by the Committee to address the implications. In<br />particular, <b>gold may be double counted</b> with either a gold swap or gold loan/deposit if the party acquiring<br />the gold were to on-sell it outright, because both <b>the original owner and the outright purchaser would<br />report ownership of the gold</b>. In addition, there is the difficulty of having <b>monetary gold being used in<br />these transactions for purposes other than for reserve assets</b>, and how <b>(de)monetization would apply</b> if the<br />gold is sold for industrial purposes. Moreover, there is a proposal, as part of the revision to BPM5 and the<br />update of 1993 SNA, to <b>treat (some) nonmonetary gold as a financial asset, rather than a commodity</b>, and<br />the outcome of that discussion may have further implications on the treatment of gold swaps and gold<br />loans/deposits. Finally, how the “fee” for gold swaps and gold loans/deposits should be treated has yet to<br />be resolved. All these matters are being considered by the Committee and a report will be taken to the<br />AEG in due course.</i><br /><br />===========<br /><br />Gold Equity Line Of Credit ("<b>GELOC</b>")DPnoreply@blogger.com