Gold under Basel III
Which brings us to gold. Currently, gold has a 50% RSF. The cost of its liability counterpart is somewhere above a demand deposit but below equity or a long-term bond.
If a bank cannot earn a sufficient return on its gold assets to cover the cost of funding, then it doesn’t make sense to have the gold. This fact puts a floor under the rate banks require when leasing or lending gold.
When Basel III becomes active in January 2022, gold’s RSF will change. It will increase from 50% to 85%, making it more expensive for banks to hold. At the very least, banks will require an even higher return on their gold leases and loans.
(Pedro Dias de Souza) https://monetary-metals.com/how-basel-iii-will-impact-gold-using-businesses/
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