18 Oct 2022 17:25

Accumulating gold in Russia's reserves not advisable right now, will lead to money supply growth - Central Bank

MOSCOW. Oct 18 (Interfax) - Purchasing gold to replenish Russia's gold and foreign exchange reserves is currently inadvisable, as this will give impetus to money supply growth, Russian Central Bank Deputy Governor Alexei Zabotkin said.

"In terms of accumulating gold in gold and foreign exchange reserves, this is at the present moment inexpedient in view of the fact that this will create additional momentum toward growth in money supply," Zabotkin said at a meeting on regulation of gold turnover at the Federation Council.

Sergei Kashuba, head of the Russian Union of Gold Producers, has proposed that the Russian authorities support the gold mining sector by purchasing all unsold gold on the market.

"The Finance Ministry has the right to make the decision to use its resources to acquire gold [to replenish the National Wealth Fund] in the volumes it considers expedient, and the government can consider some support for the sector on the whole within the framework of industrial policy, but directed support for individual sectors of the economy is not within the mandate of the Bank of Russia," Zabotkin said.

The Central Bank purchased gold on the market in March-April to stabilize the situation, he said.

"Gold purchases were carried out, they were not in very large volumes, and this happened in March-April when the market really was extremely disoriented and when, in fact, besides us there were no buyers on the market in principle. At that moment, with the goal of stabilizing the market situation, we did indeed make purchases in those volumes that at that moment were ready to sell to us," Zabotkin said.