Work detail

Central Banks' Gold Holdings and Independence

Author: Mgr. Monika Kamenská
Year: 2019 - summer
Leaders: doc. PhDr. Tomáš Havránek Ph.D.
Work type: CSF - Corporate Strategy and Finance
Language: English
Pages: 128
Awards and prizes:
Abstract: In this thesis, we aim to unveil potential relation between gold in the reserves of central banks
and the independence of these institutions. As a reaction to several statements of central bank
representatives, we assume that gold might be a determinant of central banks’ independence.
Following these statements, the key contribution of this thesis was defined: to verify these
declarations and the general belief of gold’s role within central banks’ reserves in the relation
to their independence, using empirical data. For that purpose, we examine panel data
consisting of information from 145 countries between years 1970 and 2012. As for the control
variables, economic variables such as GDP per capita, inflation, exchange rate regime, current
account to GDP and broad money and political variables from the range of word governance
indicators are employed. The regression results of basic model obtained by fixed effects
estimation suggest that, indeed, there might be a significant effect of share of gold on the
central bank independence index. However, as the results imply negative relation, we cannot
confirm if the effect is real due to endogeneity problem. Moreover, the effect of gold reserves
on the central bank independence was not confirmed when employing a different estimation
technique - generalized method of moments for panel data, neither when including world
governance indicators.




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