Percorrer por autor "Barros, Maria Teresa Botto Quintans Sousa"
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- Central banks gold reserves : hedge or weapon?Publication . Barros, Maria Teresa Botto Quintans Sousa; Fidalgo, Eva SchliephakeGold remains one of the safest assets in the world. In 2018, the central banks' gold reserves reached a maximum of almost 34,000 tonnes of gold, making it the third largest reserve asset in the world. Thus, throughout the use of an innovative econometric model, we conduct an extensive empirical analysis of the determinants of gold holdings for both developed and developing countries, for the time-frame between 2000 and 2018. We find evidence that both groups of economies tend to hold a lower level of gold when there is a higher risk of government default, therefore, using it as a source of liquidity. These results are consistent with the view that investors still consider gold as a substitute investment in times of considerable uncertainty, and also that the central bank's gold position signals economic strength. Further, our findings expose the real consequences of the Trade War, which started in 2014 and intensified under Trump's administration. We show that US sanctions and Imports from China are playing a significant role in the emerging market's gold reserves adjustments. This work has led to the conclusion that the central banks use gold as both collateral and substitute.