Project Syndicate/Barry Eichengreen/3-10-2022
“Russia’s recent experience suggests that a war chest of gold and foreign-exchange reserves may not be as useful as previously supposed. The inability of Afghanistan’s new Taliban-led government to access its dollar reserves in New York points in the same direction.”
USAGOLD note 1: Eichengreen sees governments and their central banks making radical changes with respect to managing currency reserves as a result of sanctions imposed on Russia. “Russia’s recent experience,” he writes, “suggests that a war chest of gold and foreign-exchange reserves may not be as useful as previously supposed.”
USAGOLD note 2: Such a situation leaves the door wide open for currency debasement and the risk of default. Whenever governments are unable to fully defend their currencies and financial systems, we will add, individual ownership of foreign currencies and gold become all the more important.
