Last week, delegates from the London Bullion Market Association (LBMA) including Paul Fisher, Ruth Crowell, David Gornall, and Edel Tully, joined Mike Oswin of the World Gold Council (WGC) in Basel for a meeting with the Bank of International Settlements (BIS). The delegation met with Neil Esho, Secretary General of the Basel Committee, and Noel Reynolds, Head of Basel III Implementation, to discuss the future of gold as a High-Quality Liquid Asset (HQLA).
The reclassification of gold, from its current status as a Tier 1 asset, as an HQLA would bring about enhanced market stability, improved liquidity, regulatory compliance benefits, greater confidence and trust in the financial system, and overall economic and financial stability. This would be advantageous for both financial institutions and the broader economy.
According to the LBMA, the meeting was productive, and the delegation received reassurances that they were on the right path towards advocating for the reclassification of gold as an HQLA. The discussions centred around the broad criteria for HQLA status and the progress made in the gold market concerning data transparency.
The LBMA shared a working paper with the BIS, demonstrating how the data supports gold’s potential classification as an HQLA. Additionally, the group presented key findings from an ongoing academic study, supported by the WGC, which further substantiates gold’s qualifications. The delegation received constructive feedback on the additional information the committee requires to proceed with the reclassification.