Mar 17, 2010 (LBO) – Gold now makes up 10 percent of Sri Lanka’s foreign reserve assets after the country tripled its gold holdings with a purchase from the International Monetary Fund in 2009, industry data showed.
The United States remained the largest gold holder with 8,133.5 tonnes, Germany second with 3,406.8 tonnes and the IMF third with 3,005.3 tonnes.
US accumulated large volumes of gold up to the second World War as war-torn Europe printed money and lost reserves through two world wars despite lifting convertibility at different points in time during the ‘gold standard’ period.
By 1950 the US had accumulated 20,000 tonnes of gold strengthening its case to create a dollar pegged monetary system during the Bretton Woods negotiations and weakening Britain’s John Maynard Keynes proposals for an alternative system.
IMF reserves were created from contributions mainly from developed nations.
However following the creation of the Bretton Woods system, the US steadily lost reserves due to loose monetary policy.
By 1971 US gold reserves were down to 9,000 tonnes and the US defaulted on the Bretton Woods system and lifted gold convertibility.
The world then moved into a floating c