Gold Holdings Part of Reserves: Bangko Sentral

The Bangko Sentral ng Pilipinas (BSP) clarified today that its gold holdings form part of the country’s reserves and serve as a hedging mechanism to offset fluctuations in the market prices of other assets.

The country's GIR, including gold, is held and managed exclusively by the BSP to maintain the stability and convertibility of the Philippine peso and to meet any foreseeable foreign currency demands.

Gold reserves are a component of the country’s gross international reserves (GIR), and BSP's activities involving gold—whether buying or selling—are aimed at maintaining an optimal level for hedging purposes, in line with fundamental portfolio management principles.

The BSP stated that it engages in gold transactions solely to manage the country's GIR effectively.

The country's GIR, including gold, is held and managed exclusively by the BSP to maintain the stability and convertibility of the Philippine peso and to meet any foreseeable foreign currency demands.

The BSP emphasized that these reserves are not used for any purpose other than fulfilling the country's foreign exchange requirements.

As part of its responsibility for managing the country’s external accounts, the BSP has been actively buying and selling gold over the years. When the BSP sells gold, the proceeds are reinvested into the GIR. In 2024, the GIR increased to USD 106.3 billion from USD 103.8 billion in 2023.

Gold prices typically move inversely to other asset prices. As a result, central banks hold gold as a hedge against declines in the value of other reserve assets.

However, gold prices can be volatile, generate little interest income, and incur storage costs. For these reasons, central banks, including the BSP, maintain a balanced approach to gold holdings rather than accumulating excessive reserves.