The secret of the vaults: Bank of England is not just about setting interest rates.

Bank of England is not just about setting interest rates. The gold vaults are deep within Threadneedle Street. 

Bullion has been partly displaced by bitcoin and crypto currencies as a store of value for speculators – but for sovereign governments it remains a key reserve asset.

Britain would hold a much stronger asset base now had Gordon Brown not chosen to sell most of Britain’s gold reserves more than two decades ago when the price was at its lowest.

Gold vaults: The Bank of England is known to have in safe-keeping the reserves of as many as 30 emerging market and advanced nations

Bank of England has gold vaults

The Bank has in safe-keeping gold reserves from as many as thirty emerging markets. However, it is not known who owns these vaults. 

Among those with particularly large piles are the ‘Stans’ – the Asian republics once part of the Soviet Union.

The Bank’s role as a custodian of gold means that over the years it has also held currency assets of foreign powers.

Somehow the Bank, with its rich global (better not mention colonial) history and the UK’s rule of law is seen as a good place to squirrel away assets. 

The ruling by the Supreme Court that Venezuela’s disputed leader Nicolas Maduro, who led the oil-rich nation to rack and ruin, should be denied access to £1.4billion of gold stored by the Old Lady provides a rare glimpse into this little-known aspect of the Bank’s work.

Central banks or monetary authorities may buy or sell Gold. Often, the Bank just moves or ships gold bars to Switzerland.

You can’t be a bullion dealer without electronic transfer technology like Wise, the blockchain and other fintech innovators.

The Bank of England is sometimes also put in the spotlight by such events. Most famously, in 1980, the release of reserves held by the Bank on behalf of the Iranian authorities to the late Ayatollah Khomeini’s regime was the final piece in the puzzle which freed US hostages in Tehran.

Secret diplomacy is widely credited with helping secure Ronald Reagan’s victory over Jimmy Carter in the presidential election.

Long-standing diplomatic disagreements can be resolved by financial settlements. Currently in the courts is a disputed debt of £400million allegedly owed by Britain to Tehran, dating back to the days of the Shah, for tanks never delivered. 

It’s seen as the key for the release of UK dual nationals detained like Nazanin ZaghariRatcliffe.

It could be the next transfer.

Clean up

The Government is now a candidate for the Financial Reporting Council (FRC) after a lengthy hiatus that was marred by audit scandals.

Jan du Plessis is the ex-chairman of BT. It believes that it has chosen a strong candidate to replace Simon Dingemans (ex-Glaxosmithkline finance Director), who stepped down in May 2020, after nine months.

Du Plessis is a grown-up, having served as chairman of Rio Tinto where he presided over a £11.3billion rights issue.

He also orchestrated a £78billion sale of UK quoted brewer SAB Miller to AB Inbev in a highly leveraged deal. 

His stewardship over BT was less glamorous. He arrived at BT determined to rebuild its reputation for being a top infrastructure company, but he was left with bruises amid falling shares and disputes with Philip Jansen, his chief executive.

The task at the FRC will be to steer the regulator into a statutory body – the Audit, Reporting and Governance Authority.

In the face of suggestions that power to modernize and strengthen audit may be reduced, the government has failed to provide legislative time.

It will be a big test of Du Plessis’s mettle.

Get Crap!

Playtech was the incubator for much of technology that powers sports betting.

Aristocrat is an Australian gaming company that has managed to take the lead in a market where larger Las Vegas competitors were left behind. Asia-Pacific is a huge market for betting on any sport.

Playtech and Aristocrat are now in deep trouble due to the appearance of gatecrashers that have secretly acquired a 20%-plus stake.

Odds are narrowing on a higher take-out price than the £2.1billion on the table.