France Wants In On UK's Gold Trade As Brexit Date Approaches - Reports
Image: Denis Costille/Shutterstock.com
(Kitco News) - France wants to play a bigger role in the international bullion market by capturing part of London’s global gold trade following Brexit, according to British news reports.
In the most recent step to up its game, the Bank of France announced a partnership with the U.S. banking group JPMorgan that will offer a range of new gold bullion services for central banks storing gold in France, Reuters reported on Monday citing unnamed sources.
The French central bank will be able to provide swaps, leases and gold deposits following its partnership with “a large commercial bank,” the Bank’s second deputy governor Sylvie Goulard wrote in the Alchemist — the London Bullion Market Association’s (LBMA) magazine.
Goulard also said that the Bank of France has been working on expanding its gold services since 2012 and is now in the process of renovating vaults and upgrading the quality of its gold reserves.
So far, JPMorgan only confirmed that it had “opened an account with Bank of France.”
In the meantime, sources told Reuters that the Bank of France is looking to take advantage of Britain leaving the EU by targeting London’s global gold trade.
Currently, even if other central banks store gold at the Bank of France, they have to go through London to make any market transactions because the Bank of England acts as a so-called gold custodian by providing access to the London market.
But now, with the uncertainty surrounding Brexit still worrying markets, the Bank of France wants to play a bigger role in the gold space, sources told Reuters.
“They are convinced that Brexit is going to change things and they want to be there,” one source said. “They are pitching to European potential customers.”
JPMorgan can provide the Bank of France an opportunity to do just that since it is one of the world’s largest bullion trading banks, Reuters reported.
Earlier this year, Bank of France Governor Francois Villeroy de Galhau said that one of the bank’s goals is to become “the markets’ central bank in Europe” and that Brexit presented a “historic opportunity” to restructure EU’s financial system.
“In this respect, Paris has a lot of assets to become a major center for corporate finance and innovation in Europe,” he said back in May. “We have a lot of favorable indications that big international banks will set up their market activities mainly in Paris.”