Bring Gold Home – Build a Domestic Bullion Market

For years central banks have asked themselves one simple question about their gold: is it safe? Today the answer is more nuanced – the metal also needs to be usable, liquid and revenue‑generating.

Take the Dutch example. In early September the Netherlands moved about 86 tonnes of gold to London, pushing the share of its reserves stored there from 18 % to over 30 %. The purpose? Not to hide it, but to make it easier to sell, pledge or swap in a crisis. It’s a tiny slice of a much larger trend. Germany hauled 674 tonnes back home between 2013‑2017, the Netherlands retrieved 122 tonnes from New York in 2014, and now the same Dutch bank is sending gold abroad again – this time for liquidity, not safety.

India’s story runs the opposite way. By March 2026 the Reserve Bank of India (RBI) owned 880.5 tonnes of gold, with 77 % of that (roughly 680 tonnes) stored inside the country. Three years earlier the total was just 301 tonnes. The metal has multiplied, but it has mostly stayed put, unused.

Both approaches have a point. When Western governments froze about $300 billion of Russian reserves in 2022, they showed how overseas gold can be caught in other nations’ political games. Keeping the bulk of the reserve at home shields it from such external pressures. Yet gold that lives in a vault does nothing – it doesn’t earn interest, it doesn’t fund swaps, it doesn’t support the currency when markets turn sour.

In London, most central‑bank gold trades happen in an over‑the‑counter market that circles the Bank of England’s vaults. The Bank for International Settlements in Basel acts as a clearing house, while China runs its own purchases through the Shanghai Gold Exchange. Some countries, like Ghana and the Philippines, even buy directly from miners. All of this activity creates a market – a market that India currently watches from the sidelines.

Remember 1991? With foreign‑exchange reserves drying up, India shipped its gold to London and pledged it for a $405 million loan. The gold was ours, but the market wasn’t. That lesson still lingers.

Across Asia, the tide is shifting. The People’s Bank of China has bought gold for 22 straight months, logging a record 650,000 ounces in August alone. Singapore is rolling out vault services for foreign central banks, and Hong Kong is expanding its gold‑clearing, settlement and storage capabilities. They all want a slice of the London‑style ecosystem.

India, the world’s second‑largest gold consumer, is missing out. Its metal sits at home, largely dormant. The answer isn’t to ship it elsewhere again; it’s to bring the market home.

Five practical steps to get there:

• Turn GIFT City into a regional hub. The proposed India International Bullion Exchange (IIBX) could serve South Asia, the Gulf and parts of Africa as a vault‑clearing centre. Banks could store gold, conduct swaps and settle trades without leaving the region.
• Put the RBI’s gold to work. Instead of letting it sit idle, the central bank could lend gold to commercial banks, earn leasing fees, swap it for dollars during currency pressure, or use it as collateral for inter‑central‑bank borrowing. Most of these moves today happen via London or Basel; doing them locally would keep fees and expertise in India.
• Maintain a liquid overseas tranche. The RBI already holds about 198 tonnes with the Bank of England and BIS. That slice can be mobilised within hours in a crisis. A policy rule should preserve a minimum foreign‑held proportion to ensure rapid access.
• Mobilise household gold. Introducing electronic gold receipts, backed 100 % by physical bullion, plus a regulated gold‑leasing market, would pull idle private holdings into the financial system, cutting future import needs.
• Price in rupees. If the IIBX trades gold contracts denominated in Indian rupees, it would deepen the domestic price discovery mechanism and reduce reliance on dollar‑priced benchmarks.

By combining a vibrant exchange, active lending, a strategic overseas buffer and household participation, India could transform its impressive reserves from a static pile into a dynamic engine for liquidity, earnings and financial stability.

The world is already moving toward regional bullion centres. India’s next logical step is to let its gold live where the market is – at home.