Gold and silver coins have always circulated among merchants and traders, who recognised their value and used them for monetary purposes. And with the dawn of modern times, embryo city states such as Venice, Genoa and Florence also began using paper banknotes with greater frequency. At this time, the most common formats were either “Goldsmith Notes” or banknotes. To a certain extent, the former functioned as tradable warehouse receipts issued by goldsmiths on the gold stored in their possession. The latter were actually gold-covered banknotes issued by respective banks.
Here, what is known as a bill of exchange or real bill – another negotiable instrument in paper form – must be distinguished from these banknotes or goldsmith’s notes. A bill of exchange is a contractual promise to pay, which usually has to be redeemed for physical gold after three months (90 days). In contrast to gold-backed banknotes or goldsmiths’ warehouse receipts, a bill of exchange has a precisely defined due date on which the bill of exchange must be settled in gold to the value of the amount denominated in the paper. This is a form of payment which thus “matures into gold”.
Bills of exchange were customary, especially among traders, and thus primarily originated from their use in private trading. However, it was mostly royal families who financed their state credit with gold-covered banknotes. With the invention of letterpress printing and its scaling options, paper money could be scaled too. This feature ensured that, from at least the early modern era, gold and paper (money) would enjoy a close coexistence.
Particularly with gold-backed banknotes, it has repeatedly proved the case that the corresponding gold promises were not honoured – in other words, the notes could not in fact be redeemed against the predefined amount of precious metal. Not infrequently, this was because of wars that brought major debtors – thus mostly kings and princes – to the brink of insolvency. This in turn would affect the financing banks, forcing them to lift the obligation to redeem.
The Peel Banking Act as a catalyst
In England, the so-called Peel Banking Act of 1844 was finally passed in response to such constantly recurring events. This legislation created a legal, gold-backed fiat currency, which laid the foundations for a state-imposed gold standard, a staple feature of national finance for the next 70 years. The Bank Charter Act of 1844 stipulated that only the Bank of England was authorised to issue new banknotes, and that these had to be backed by holding a specified amount of gold. Today, it is believed that this move helped the British pound sterling to become the global currency of the 19th century. In the wake of this legislative act of the English Parliament, around two thirds of all payments in international trade were soon being settled in British pounds.
During this time many nations were still using a silver standard, or even a bimetallic standard where their monetary system was based on both gold and silver. In the course of the 19th century the position of gold compared to that of silver improved continuously. The discovery of huge silver deposits in the USA’s Rocky Mountains caused a glut of silver, meaning a fall in the silver price was almost inevitable. So in 1873, the US parliament decided to move away from silver, a move which essentially heralded the global demonetization of silver.
At the same time, France lost the Franco-Prussian War in 1870 and was then obliged to make reparation payments in gold. And for the newly reunified Germany, which enjoyed above-average gold inflows as a result, the introduction of a gold-backed Reich currency seemed to be a logical consequence.
These historical events, coupled with the increasing economic interdependence of all nations, plus the mutual influence of the two strongest industrialised countries – England and Germany – led to a comprehensive global departure from bimetallism. Even France and nations with large silver stocks like Peru and Mexico decided to adopt a gold standard.
A Golden Age
What began in the course of the 1870s and lasted until 1914 was a time of economic boom based on a stable, internationally recognised platform – gold. This yellow precious metal acted as an anchor, connecting the paper currencies of many nations. Each gold-backed currency could be exchanged for another at any time, and at a fixed exchange rate. This made international trade much easier, which in turn encouraged a wave of globalisation. Relying upon the security of a gold-based currency, trading partners were able to enter into contracts, even though they could be many miles apart, without having to worry about excessive exchange rate fluctuations, also known as ‘foreign exchange’ risks.
As long as all the individual central banks pursued an appropriate gold policy as regards their own currency – and this peer-group pressure seemed to work well at this moment in time – they could mutually conserve their gold reserves, thus preserving the stability of their own currency and ultimately contributing to the stability of the international gold standard.
The moral philosopher David Hume developed a model describing what he considered to be the self-corrective mechanism of an 18th-century international gold currency system. According to what Hume termed the price-specie flow mechanism, a country with a balance of payments deficit would experience an outflow of gold and thus a reduction in its money supply. As a consequence of this, domestic price levels would in turn decrease and the competitiveness of that country compared to foreign countries would thus increase, which would thus correct the balance of payments deficit. The opposite would occur in countries with a balance of payments surplus.
In reality, it seems highly likely that the procedures and processes involved were by no means that straightforward and perhaps rather more complex than had been anticipated. For instance, gold attracted rather high transaction costs, which meant that the transport of gold was subject to considerable inertia – a factor not to be underestimated, especially when such transport involved crossing national borders. However, this problem was mitigated by the gold-backed ‘paper exchange’ system, which established itself as the de facto clearing house for the classic gold standard, especially across international borders.
In practical terms, the major benefit of the international gold currency system was to facilitate a well-networked global economy and a semi-automatic adjustment of the balance of payments (especially via the exchange rate system) which was managed despite the involvement of individual sovereign nations. All of this was ultimately achieved without state governments having to intervene strongly, and without the need for superhuman knowledge and monetary policy infallibility on the part of money managers.
However, there was also an expansion of the money supply during this era of the classic gold standard. In the period from 1899 to 1914, the international economy recorded high monetary liquidity, which was due to a sustained increase in global gold stocks. This expansion reached 3.5 percent annually between 1890 and 1914, a figure well above the average annual growth of 1.5 percent which had occurred between 1866 and 1890. This increased liquidity ultimately led to larger transaction volumes and higher prices.
Nevertheless, this period of about 30 years of economic prosperity and cultural flowering (especially so in France) became known as the “Belle Epoque”. Not only was there an evident economic boom, there were also landmark achievements in culture and science. And perhaps above all in the field of physics, there were many new discoveries and breakthroughs. A certain Mr. Röntgen discovered the existence of X-rays in 1895. While again in this same era, around 1900, Max Planck established his quantum theory and Albert Einstein formulated his famous theory of relativity. It was also during this period that the physicists Rutherford and Bohr discovered their new atomic models.
An abrupt end
This period of relative calm was then followed by a storm. Even before the first shot had been fired in World War I, the classic gold standard came to an abrupt end. To some extent, when war broke out, Germany, Great Britain, France, Austria-Hungary and the Tsarist empire all turned their backs on the gold standard. The obligation to redeem their respective national currencies for gold was abruptly cancelled because individual countries saw their gold reserves dwindle in the course of their mobilisation for the war. Gold convertibility was suddenly suspended, especially with a view to avoiding the likelihood of so-called bank runs.
During the First World War, politicians and central currency watchdogs were confronted with a dilemma that would not be properly recognised for what it was until several decades later. In Germany, the aim was to try to increase the gold reserves of the Reichsbank because it was thought this would convince the domestic population to hold on to the German mark. So over the next two years, the gold reserves were actually increased from 1.5 billion to 2.4 billion.
At the same time, the lifting of the gold standard made it possible to finance soldiers and war machinery. Countries borrowed from their own central bank, as the latter began to print money backed by gold and put it into circulation. This would never have been possible without a move away from the gold standard.
Gold stocks did not lose their importance during the war, because after all, they still had to be used to pay for essential imports. However, gold was gradually becoming far less of an anchor of trust for national currencies, which had suffered a great deal of wartime inflation. Under the terms of the Versailles Peace Treaty, the victorious powers demanded reparation payments in gold (or dollars), which consequently strengthened their own national currencies to some extent. For Germany, which had emerged as a loser from the war, the loss of confidence in its own currency was inevitable. The hyperinflation which hit Germany in 1923 was therefore a logical consequence of the country’s disastrous monetary policy situation.
Gold in the interwar years
After the end of World War I, attempts were then made to reintroduce the gold standard in England. Due to the increased amounts of money, the obligation to pay could not be resumed one-to-one at the old rate. And it was in fact another six years before the gold standard was restored.
In 1925, the then treasurer Winston Churchill ordered a return to the gold standard. However, it was a gold standard of a slightly different kind, which no longer had the same kind of real-gold convertibility as had prevailed prior to the war. The Gold Bullion Standard was established by the British Gold Standard Act of 1925. This new standard did not reintroduce the circulation of gold coins. Instead, the law required the Bank of England to sell gold for pounds in the form of bars equivalent to about 400 fine troy ounces.
Other European countries also significantly increased their gold reserves again during this period. The world seemed to revert to the old value of the gold standard. But deep-lying problems were already about to emerge. For one thing, certain states tried to defend their own currency and their gold reserves. The massive credit expansion policy that various central banks (above all the US Federal Reserve) pursued even after the end of the First World War came home to roost in 1929 and plunged the global economy into a crisis that would go down in history as the Great Depression.
The gold bullion standard: a paper tiger
Today, the reintroduction of the gold standard is commonly seen as the cause of the global economic crisis. But the reasoning behind this assertion is somewhat clumsy in several respects. The reintroduction of the gold standard by the English after World War I was based on a false concept proposed by the great economist David Ricardo. As the late mathematician and monetary theorist Antal Fekete asserted, a gold standard only really makes sense if it exists in the form of a gold coin standard.
Ricardo’s proposals were that the Bank of England should completely replace circulating gold coins with their own banknotes. These banknotes should only be exchangeable for larger gold bars. In this way, the British central bank would be able to better conserve its gold budget, because the exchange threshold was set higher due to the stipulation about gold bars. According to Ricardo’s thinking, this would make gold convertibility more efficient from the central bank’s point of view.
Even when David Ricardo presented this proposal at the beginning of the 19th century, it was heavily criticised at that time. Fekete also accuses Ricardo of having to some extent created a gold standard without gold money. In the eyes of the Hungarian economist, the circulation of gold coins was a necessary pre-condition. Because it’s only when gold coins are in circulation and central bank notes can effectively be redeemed against them that all citizens then have an effective means of defending themselves against any potential inflation of the central bank’s currency. If gold coin convertibility is not allowed and replaced by a duty to redeem gold bars, this means of defence is grossly impaired and so, according to Fekete’s argument, the gold bar standard would turn out to be a mere paper tiger.
A gold standard without a clearing house
Professor Fekete brings up another argument as to why the reintroduction of the gold standard after the First World War was doomed to failure. The clearing house in the form of the exchange paper market, which was so important for the classic gold standard, was swept away by the World War and never brought back intact. Instead of a multilateral trading system as it existed in the pre-war period, the victorious powers advocated bilateral trading. The older system did not last because the Allied side believed they had found a better means of controlling the trading activities of German industry, whose productivity and innovative strength were much feared.
But it wasn’t just the reintroduction of the gold standard which caused the shambles after World War I. Its reintroduction was also preceded by that war’s economic and cultural devastation, while the reconstruction of the gold standard was itself distorted by an unprecedented increase in the amount of money and credit available.
Even this watered down, and therefore much less functional, form of the gold standard was by no means the sole cause of the crisis. The fact remains that clinging to gold after the war also had its downsides. In some countries, the creed still applied that their own gold reserves should be protected by high interest rates. Other nations, however, did the opposite by lowering interest rates to stimulate domestic growth. This in turn led to an outflow of capital towards high-yielding countries, where these funds then triggered an overheating of economic activity.
The latter course took place in the United States of America, which under President Hoover pursued a rigid and protectionist deflationary policy. President Franklin D. Roosevelt, who was elected as his successor at this time, moved away from the gold standard and declared that the private hoarding of gold coins, gold bars or gold certificates was forbidden. As a result of this step, the US was able to increase its money supply again and at the same time increase its gold reserves, because a concentration of gold in government hands became inevitable. This counteracted the global economic crisis until the Second World War finally broke out. However, the real reason for the great economic crisis lies deeper and is in fact to be found in economic and monetary policy distortions caused by war and the expansion of credit volumes.
The pseudo gold standard of the post-war era
To finance the Second World War, those countries that had in the meantime pegged their currency back to gold then deviated from this strategy. The result was a renewed expansion of the amount of money and credit, which now reached even greater proportions.
After the Second World War, when the world was yet again faced with the task of reconstruction, various heads of state and economists met in Bretton Woods, USA. This conference established what became known as the Bretton Woods system. This was a kind of pseudo gold standard: While all state currencies were pegged to the US dollar, the US dollar was in turn pegged to gold.
National currencies from all over the world thus had a fixed exchange rate against the US dollar, which could still be exchanged for an ounce of gold at 35 US dollars. However, this option was withheld from other central banks. So this solution created a kind of exemplar gold exchange standard.
Even though, or perhaps because, the Bretton Woods system was put together on the drawing board, its authors made a serious mistake in their reasoning. The pressing dilemma was that the US needed to provide liquidity to the rest of the world while maintaining confidence in its gold-backed currency.
In the beginning, the pendulum of this dilemma swung in favour of those building trust. Gold initially migrated to the USA, thus enabling the US dollar to live up to its position as a gold-backed currency. But after 1957, American gold reserves steadily decreased. On the one hand, US participation in the Vietnam War required an increase in the American money supply. On the other hand, there were the social programmes passed by President Lyndon B. Johnson, which had also been partly financed by newly created money. But belief and confidence that the US could exchange all of its US dollar holdings for gold continued to decline. The pendulum swung back again, and the United States began to borrow at the expense of the rest of the world.
After the French President Charles de Gaulle announced in February 1965 that France’s currency reserves in US dollars would be exchanged for gold, de Gaulle alone increased the gold share of his country’s reserves to 86 percent. Other countries tried to do the same, until finally on August 15, 1971, the then US President Richard Nixon announced on television that gold would no longer be linked to the US dollar. This effectively signalled the end of the Bretton Woods system. This last event meant that the world had finally abandoned the system of anchoring currencies to gold, and switched to a fiat monetary system which has remained the default standard to this day. Through this fiat policy switch, the world has been largely subordinated to a dollar standard, the dollar in turn to a government bond standard, and each government’s credit to a large extent to its own political stability.
The advantages of a real gold standard:
As already described, a legally agreed gold parity is not enough for a gold standard worthy of the name. In other words, a gold standard in which a state currency is tied to a legally set gold price should not be interpreted as a real gold standard.
From a citizen or saver’s point of view, the optimal form of gold standard is that of the gold coin standard. It is characteristic of such a system that gold coins, as the smallest currency unit, should be left free to circulate and not just available for hoarding. It is a sine qua non of any gold standard that it should have a free market for gold and that everyone is allowed to trade gold freely, especially gold coins.
Only when a gold coin is in circulation, can it be minted and owned, and thus exert its restraining power. This is the big advantage of a gold coin standard: Citizens of a state can bring their banknotes to the bank and request they be redeemed for gold. By having to give certain amounts of gold coin in exchange for banknotes or bank loans it has issued, the bank loses its gold reserves. This in turn means the bank has to throttle back its banknote expansion. Gold coins in the hands of the citizen are thus an effective means of steering and controlling the monetary policy of central banks.
Only if a gold standard is designed in this way can its advantages and virtues also come into their own over the longer term. If the citizenry have the opportunity to exercise influence and control over the expansion of the money supply via gold coins, interest rates can be kept stable. As our pre-1914 history shows, relatively stable market rates were a common feature of a functioning gold standard,.
Contrary to what is commonly assumed, a functional gold standard does not ensure price stability, but rather establishes interest rate stability. The former is neither desirable, nor is it really feasible in a dynamic world in which the preferences of market participants are constantly changing. Comparatively stable interest rates are more decisive. If interest rates fluctuate too much due to an unbound (i.e. not tied to gold) monetary policy, interest rate arbitrage occurs via excessive bond speculation. This behaviour only throws interest rates even more off balance, so that in today’s market reality they have fallen to zero over the past few decades – and recently even into negative territory.
Due to its inherent (interest) stability, a functional gold standard is also characterised by consistency and system stability. Since gold underlies the entire system, the monetary system of all nations participating in the gold standard are based on a common denominator. Gold is the main denominator and thus acts as the ultimate unit of account. Transaction costs in the form of exchange rate risks are much lower compared to a fiat standard. As a result, there is hardly any need for such a vast industry to hedge against these risks in the way it tends to do today.
The disadvantages of a gold standard
The disadvantages of a functional gold standard are above all most apparent to those for whom money must first and foremost have an inherent flexibility. Gold is a physical financial commodity and therefore cannot be expanded or created at will. And since gold in its physical form can only be accumulated at constantly increasing marginal costs, a financial system based entirely on gold is considered by many economists to be a highly dysfunctional option.
The argument is often made that there is never enough gold in relation to our global economic performance. However, there is still a bitter debate among economists about that optimal amount of money, and thus of gold. For some, any amount of money (and thus of gold) is sufficient, because the market would ultimately regulate its correct relationship to the goods via its pricing. But for other economic experts, gold is simply too rigid and inflexible, and would ultimately lead us to a never-ending price deflation spiral that would make all economic activity impossible.
Of course, if necessary, more gold could be mined to compensate for supply bottlenecks. But wouldn’t that create volatile prices which would again make trading more difficult? Probably less than is generally expected, given that the impact of newly created gold on the gold price is actually negligible due to stock-to-flow ratio issues. In other words: A potentially strong gold mining performance in the course of the reintroduction of a gold standard should not necessarily cause the price to plummet.
Regardless of these arguments, a so-called 100 percent gold standard, in which existing money consists only of gold coins or gold certificates which are 100 percent backed by gold, would not in fact not be particularly desirable because of the lack of flexibility. An economy must be able to operate on credit, which can also be leveraged to a certain extent. What remains important is that higher levels of loan money must be anchored in gold as a hard currency option. Over the longer term, this is the only way to ensure the financial system does not suffer from excessive inflation.
As human history has shown, this golden anchor did not hold. And without pointing an accusing finger at any single institution, the idea of creating money out of nothing has always had a certain attraction. As a hard currency, gold has always stood in the way of demands from states, companies, institutions and debtors.
Gold’s relationship to today’s fiat standard
Gold and fiat money are not actually antagonists. A financial system that started with gold and has been continually upscaled looks like it is reaching a terminal stage with today’s fiat currencies. Where the link between gold and all types of paper money used to be stronger and more direct, today it is more indirect and considerably more fragile.
Though marginalised by government bonds, gold still provides the core or foundation, and thus the reserve asset, of our traditional financial systems. The fact that central banks still show gold reserves on their balance sheets – and some have even increased them over the past few years – is a clear indication that the importance of gold has not yet been completely dismissed from today’s fiat standard.
If state fiat currencies were now beyond all doubt, and had been successful in completely emancipating themselves from their former foundation, central banks would be the last to hold on to gold reserves. However, the yellow precious metal still seems to have a role to play as a store of value, as a means of protection against inflation and fiat currency devaluation, and as the ultimate insurance against any possible system collapse.
As already described, the reintroduction of a gold standard would be an optimal choice if it were in the form of a gold coin standard. In addition, a functioning exchange paper market would have to be developed. Ultimately, a free market for gold money would be needed, which would also have to be subject to an irrevocable obligation to redeem in gold.
Overview of gold reserves
The following graphic gives an overview of the gold reserves held by central banks. It shows the 16 countries in the world which officially have the most gold reserves. These are set in relation to the population. At the same time, the percentage value of gold reserves in relation to the gross domestic product is also displayed, as is the percentage value of gold reserves compared to the balance sheet total of the respective central bank.
In absolute terms, the United States has the largest gold reserves, followed by Germany and Italy. But in relation to the population, Switzerland is the country that catches the eye. In Switzerland, for example, there are around 121 kilograms of gold for every 1,000 inhabitants. And when it comes to the value of gold reserves in relation to their respective gross domestic product, Switzerland is again way ahead, along with Russia and Portugal. Kazakhstan has the greatest gold by value. This country owns so much gold in relative terms that its gold reserves account for more than 95 percent of the Kazakh central bank’s total assets.
|Country||Gold reserves in tons (absolute)||Gold reserves relative to the population (in kilograms per 1,000 citizens)||Value of gold reserves relative to GDP (as a percentage)||Value (January 2021) of gold reserves relative to total assets of the central bank|
|USA||8,133.5||24.72kg||2.48 %||6.92 %|
|Germany||3,362.4||40.51 kg||5.33 %||11.83%|
|Italy||2,451.8||40.61 kg||7.37 %||11.47%|
|France||2,436.1||36.37 kg||5.49 %||9.01%|
|Russia||2,299.3||15.91 kg||8.66 %||26.2%|
|China||1,948.3||1.4 kg||0.89 %||2.08%|
|Switzerland||1,040||121.71 kg||9.2 %||5.85%|
|Japan||765.2||6.05 kg||0.96 %||0.7%|
|India||668.2||0.49 kg||1.53 %||10.5%|
|Netherlands||612.5||35.44 kg||4.2 %||6.56%|
|Turkey||606.6||7.4 kg||4.93 %||24.13%|
|Taiwan||422.7||17.78 kg||4.17 %||4.63%|
|Portugal||382.5||37.2 kg||9.95 %||14.97%|
|Kazakhstan||381.7||20.88 kg||13.33 %||95.27%|
|Saudi Arabia||323.1||9.56 kg||2.57 %||4.2%|
|United Kingdom||310.3||4.66 kg||0.68 %||1.62%|
Numbers as of October 2020
As this analysis shows, the gold standard is a broad topic which really has to be viewed from a variety of perspectives. Unfortunately, the contributions, assessments and interpretations offered by many of today’s economists are often too biased and sometimes betray a rather superficial understanding of the matter. As is so often the case with the gold standard, the devil lies in the detail.
Clear definitions and classifications are required to understand this story in any depth. They are also essential if one wishes to profitably discuss the advantages and disadvantages of a gold standard. So we hope this publication has made some constructive contribution to the vibrant debate surrounding the gold standard.
Will the world – that is, its nation states – ever return to a gold standard? No one really knows the answer. Once you have freed yourself from a golden yoke, you may have little incentive to submit to it again. But perhaps the countries of the world will have to do it one day in order to restore proper confidence. That will be the moment when the fiat standard comes to an end and has to return to its roots – gold.
Whatever the outcome, today’s investors at least have a ready option for the safekeeping of their own gold and silver assets. For secure and segregated custody, Swiss Gold Safe already offers its own gold standard vaults. These privately owned facilities are bank-independent and offer absolute discretion alongside a comprehensive insurance cover.
- Gold and silver coins have always circulated among merchants and traders. Paper banknotes gradually established themselves with the dawn of modern times.
- A fundamental distinction must be made between paper money notes and trading exchange papers. A bill of exchange is a contractual promise to pay, which usually has to be redeemed for physical gold after three months (90 days).
- With gold-backed banknotes in particular, it has repeatedly been the case that the corresponding gold promises were not honoured. In other words, the banknotes could not be redeemed for the predefined amount of precious metal.
- The Peel Banking Act of 1844 set a legal, gold-backed fiat currency in England for the first time. This act established the rise of gold in the 19th century, while silver was also being demonetized.
- Towards the end of the 19th century, there followed a period of global economic boom based on a stable and internationally recognised gold standard. This was ended abruptly in 1914 when the obligation to redeem the respective national currencies for gold was suddenly cancelled.
- During the interwar period, then Treasurer Winston Churchill ordered a return to the gold standard in 1925. However, it was a gold standard which no longer had any real gold convertibility, unlike the arrangements which had prevailed before the war.
- Without gold coin convertibility, the gold standard turned out to be a mere paper tiger, because citizens no longer had an effective means of defending themselves against the potential risk of central bank inflation.
- After the First World War, the gold standard also lost its clearing house in the form of a securities market. This restricted the circulation of gold and therefore led to an increasing concentration of the yellow precious metal in central locations.
- The gold standard after World War II should really be considered a pseudo gold standard. Only the US dollar was directly linked to gold and could be presented to foreign central banks for redemption for the precious metal.
- A characteristic of a real gold standard is that gold coins, as the smallest currency unit, can not only be hoarded, but are also free to circulate.
- The big advantage of a gold coin standard is as follows: Citizens of a country can bring their banknotes to the bank and request they be redeemed for gold. This facility acts as a means to prevent excessive banknote inflation.
- Contrary to what is commonly assumed, a functional gold standard does not ensure price stability, but actually promotes interest rate stability. Due to this inherent (interest) stability, a functional gold standard is also characterised by consistency and system stability.
- The perceived disadvantages of a functional gold standard exist primarily in the eyes of those for whom money must first and foremost possess an inherent flexibility.
- A so-called 100 percent gold standard, in which the existing money consists only of gold coins or gold certificates which are 100 percent backed by gold, is in fact not particularly desirable due to its lack of flexibility. A bills of exchange market is therefore essential.
- Even when marginalised by government bonds, gold is still the foundation, and thus the reserve asset, of our traditional financial systems. All the major central banks’ holdings in gold prove this is still the case.
- The United States has the largest gold reserves, followed by Germany and Italy.
- When considered in relation to the population, it’s Switzerland that catches the eye. In Switzerland, for example, there are around 121 kilograms of gold for every 1,000 inhabitants.
- Kazakhstan has the highest gold value. The country owns so much gold in relative terms that its gold reserves account for more than 95 percent of the Kazakh central bank’s total assets.