The Banque de France sells all gold bars held in custody in the U.S., strategically shifting its gold reserves and achieving a three-way win

Ask AI · What’s the clever part of the Bank of France’s gold swap strategy?

China Finance Network (Caixin Global) April 7 report (Editor Ma Lan) Global central banks are building a value-hedging system for the US dollar led by gold, and this is also one of the important reasons why gold prices kept hitting new highs last year.

However, in this process, some analysts have also warned of the risk that certain Western countries concentrate their gold reserves in the gold vaults in New York, especially in the context of the U.S. government threatening to annex Canada and Greenland. Still, the Banque de France (Bank of France) may have found a win-win-win method.

As part of the Bank of France’s FY2025 announcement, it disclosed a special program: it sold the gold reserves it held in custody in the United States, then bought back an equivalent weight of gold in Europe. This move ensured that the Bank of France’s gold reserves at the beginning of 2026 would be the same as at the beginning of 2025, while also generating substantial foreign-exchange gains due to price differences between buying and selling.

According to the bank’s disclosure, the transaction was mainly concentrated between July last year and January this year. Capital gains from trading gold bars enabled the Bank of France to achieve a net profit of 8.1 billion euros in 2025. In 2025, total foreign-exchange income from this special item reached 11 billion euros.

Reducing reliance

The Bank of France’s liquidation of gold at the Federal Reserve Bank of New York did not trigger any opposition from the U.S. government. It also allowed gold to be taken out of U.S. custody, avoided the high shipping costs for transatlantic transport, and even ended up making a small profit.

This project involves 129 metric tons of non-standard gold bars, accounting for 5% of the Bank of France’s total gold bar reserves. These bars have been stored at the Federal Reserve Bank of New York since the late 1920s. Selling this batch of gold bars means the Bank of France has now concentrated all of its gold reserves into the La Souterraine vault in Paris, totaling 2,437 metric tons of gold bars.

This may provide some strategic reference for Germany. Germany has the world’s second-largest gold reserves, and some economists have called on the German government to withdraw its gold reserves from the United States, citing concerns that Trump’s policies are unpredictable and may harm Germany’s interests.

At present, the Deutsche Bundesbank holds about 1,236 metric tons of gold in the United States, or about 37% of its total gold reserves.

However, Bank of France Governor ⁠Francois Villeroy de Galhau emphasized that the decision to keep the bars in Paris rather than New York was not driven by political motives. The reason for the deal is that the gold in Europe that is purchased consists of higher-standard gold bars, making it easier than processing the old gold bars in the New York vault.

(China Finance Network, Ma Lan)