another gold video, page-8

Danhoff

"What bank investments are risk free?"

Strictly speaking, Cash in the currency inwhich the bank's liabilities are denominated is risk free. Bank's can use it directly to meet their obligations.

You are right to cast doubt on government bonds as risk free assets.

Under the Basel Accords, government bonds held in the Trading Book (subject to daily Mark-to-Market) are subject to a Market Risk capital requirement. Government bonds held in the Banking Book as investments (and subject to accrual accounting) have a zero risk weighting. It is the Banking Book treatement applied to bonds issued by European Governments that have caused all the problems.

I think that giving gold zero risk weighting opens banks to the same sort of exposure, and the Basel Committe will have none of it.