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Where Countries Hold Their Gold:
the Federal Reserve's Gold Vault

New York City is home to the biggest vault in the World. The Federal Reserve's Vault.

It's huge, it's full of gold (if it's really there!) and it's international: this is where countries from Germany to Ecuador hold part of their gold reserves.

Certainly there are many other, commercial banks, where nations are allowed to keep their gold bullion bars in exchange for a fee.

Why do Countries Hold Their Gold at the Federal Reserve?

There are several reasons and here are two of the most important ones...

 1. Security Concerns

For fear of theft, looting or damage and theft during conflicts with other countries, the central banks of various states around the World have deposited their gold bars in New York.

After all, New York is considered relatively safe and "the financial capital of the World".

The United States are a great power and "less would dare to attack" it is behind the feeling of safety that depositors felt when putting their gold in.

 2. Facilitates Trade and Exchange

The gold bars here have a code, a number on them. Each country owns a list with the codes of the bars that they own. When a country sells gold or exchanges gold for products or services, the bars aren't physically transferred. Instead, only the codes are transferred from one country to the other.

For instance, if "country A" buys oil from "country B" in exchange for gold, then a certain amount of "country A's" gold bars will simply change their owner. For example - gold bars previously owned by "country A" and numbered "000120" to "000273" will from then on be owned by "country B".

Ownership transfer is merely a transfer on paper.

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