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entral banks around the world are planning to reduce their holdings of U.S. dollars over the coming decade for the first time, reflecting growing concerns over geopolitical risks and policy uncertainty surrounding the world’s dominant reserve currency, according to a new survey released on Tuesday.

The findings, published by the Official Monetary and Financial Institutions Forum (OMFIF), mark the first time its annual survey has found that more central banks intend to decrease their dollar allocations than increase them over the next 10 years.

The survey, which gathered responses from 90 central banks, sovereign wealth funds and public pension funds managing a combined $10 trillion in assets, points to a gradual transformation in global reserve management as policymakers prepare for a more fragmented international financial system.

Although the U.S. dollar remains the world’s primary reserve currency and has gained around 3% this year, respondents increasingly cited political uncertainty in the United States and rising geopolitical tensions as reasons to diversify their portfolios.

The shift comes amid broader debate over the future of the global monetary system following heightened international tensions, including the recent U.S.-Iran conflict, and changing global economic dynamics.

OMFIF Senior Economist Yara Aziz said public investors increasingly regard market volatility as a permanent feature rather than a temporary disruption.

“The old assumption that public investors can wait for the environment to normalize looks increasingly unrealistic,” Aziz wrote in the report.

Gold strengthens its role in reserve management

Despite expectations of reduced dollar holdings, the survey found no clear replacement for the U.S. currency.

Instead, reserve managers are gradually expanding holdings across a wider range of currencies while significantly increasing allocations to gold.

Nearly four out of five central banks surveyed, along with 60% of public investment funds, believe the international monetary system is evolving toward a more multipolar structure in which reserve assets become more diversified.

Currencies outside the traditional major reserve group are attracting greater attention.

Respondents reported increasing allocations to the Norwegian krone and the New Zealand dollar, while interest in the British pound also continued to grow.

Central banks also maintained plans to increase holdings of the euro and China’s renminbi, although respondents said structural limitations continue to constrain both currencies from becoming dominant alternatives to the dollar.

Even so, almost all respondents viewed the Chinese yuan as an effective tool for portfolio diversification.

Gold emerged as one of the strongest beneficiaries of changing reserve strategies.

Held by 82% of surveyed central banks, the precious metal has moved to the center of reserve management policies after reaching successive record highs over recent years.

In the next one to two years, gold is expected to see the largest increase in allocations among reserve assets, with a net 30% of respondents planning to expand their holdings.

Analysts say central banks increasingly value gold as a hedge against inflation, geopolitical instability and financial market volatility.

Artificial intelligence reshapes investment strategies

Beyond reserve diversification, the survey highlighted a rapid acceleration in the adoption of artificial intelligence across public financial institutions.

More than two-thirds of central banks said they plan to expand the use of AI in the near future, while none of the advanced economy central banks surveyed indicated they were satisfied with current levels of AI deployment.

Overall, only 9% of central banks said existing AI integration met their needs.

Most institutions currently use artificial intelligence for data analysis, research and administrative functions, although adoption varies significantly between developed and emerging economies.

Nearly 90% of central banks in advanced economies already use AI, compared with just 44% of those in emerging markets.

The report also found growing investor interest in physical assets.

Almost 60% of public investment funds intend to increase allocations to infrastructure and real estate over the next two years, making them the most popular asset classes outside traditional financial markets.

Emerging markets are also attracting renewed attention

Thirty-eight percent of public funds plan to increase investment in emerging economies, up sharply from 27% in last year’s survey.

At the same time, interest in expanding exposure to developed economies declined significantly, with only one-quarter of respondents planning to increase allocations compared with nearly half a year earlier.

Despite diversification efforts, the United States and China remained the most attractive investment destinations, largely because of their leading positions in artificial intelligence development and technological innovation.

The survey suggests that while the U.S. dollar is likely to remain the world’s dominant reserve currency for the foreseeable future, central banks are increasingly seeking broader diversification through gold, alternative currencies, emerging markets and new technologies to navigate a more uncertain global economic environment.

(Source: Reuters)

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rom a macroeconomic perspective, gold savings kept under mattresses represent idle wealth. It is estimated that Turkish households hold around 4,000–4,200 tonnes of gold. At current prices, this is worth around $550 billion. Of this amount, 1,000–1,200 tonnes are held within the financial system (in the Central Bank and in bank gold accounts), while an estimated 3,000 tonnes remain outside it. In other words, it is estimated that there are 3,000 tonnes of gold under mattresses, with an economic value of 415 billion dollars! In my opinion, it is worth even more than half a trillion dollars!

The equivalent of the current situation

If you ask what this figure means, I will briefly explain: it represents around 30 KAAN-scale defense industry projects. It signifies the end of structural unemployment in Türkiye, with 8,300 factories employing 4 million people. It means around 500 world-class universities. It means 1,400 city hospitals, each with 1,000 beds. It means becoming Europe’s largest energy powerhouse with 380,000 MW of wind energy capacity. It also means 700,000 MW of solar energy capacity. This is six times Türkiye’s current installed electricity capacity, which would eliminate the need for energy imports and close the current account deficit. Shall I continue? It means 400 Eurasia tunnels, 185 Çanakkale bridges and 350 Osmangazi bridges. Therefore, the question we are seeking an answer to is very valuable. We need to address the issue within this framework.

According to a 2025 ING Türkiye study, physical gold held under mattresses is the most popular savings instrument in our country (35 per cent). It is not difficult to guess what comes second: cash foreign currency held under mattresses (28 per cent). Third on the list are TL deposit accounts (21%), and so on.

In order to answer the question of how to bring gold held under mattresses into the financial system, we must first understand why it is outside of it and grasp the characteristics of the saver.

There are two essential pillars of the economy: trust and stability. The above figures clearly show that Türkiye’s long-standing preference for gold stems from a lack of trust in the financial system. Past periods of high inflation, collapsed banks and financial crises have damaged the trust of the Turkish people. Combined with religious sensitivities, this has led to the widespread accumulation of physical gold over the years, with people adopting the mindset of ‘just in case, I’ll keep it under my control’.

What has been done so far?

Over the past fifteen years, various tools have been introduced in Türkiye to incorporate ‘mattress gold’ into the financial system. For example, in 2011 the Central Bank of the Republic of Türkiye (CBRT) introduced a gold option to its Reserve Requirement Mechanism (RRM), leading to the development of gold banking. Banks drew physical gold into the system through gram gold accounts. However, the requirement to import gold in order to reach the targeted volume limited the release of existing under-the-pillow stocks. Although approximately 60 tonnes of gold were brought into the system in subsequent years through scrap gold campaigns organized by banks and collaborations with jewelers, society’s adoption of gold as a financial instrument remained limited.

In 2017, the Treasury and Finance Ministry issued gold bonds and gold-backed lease certificates, which aimed to build trust by allowing physical gold to be redeemed in kind at maturity and offering additional returns in gold. However, these lost their appeal in an environment of high inflation, and the amount collected remained limited to a few tonnes. The Mint Gold Certificate, issued by the General Directorate of the Mint and Stamp Printing House and traded on the Istanbul Stock Exchange since 2022, has attracted new investment to the market by offering the opportunity to invest in small amounts of digital gold in a safe way. However, it has not significantly reduced the existing stock of gold.

Over the past fifteen years, various tools have been introduced in Türkiye to incorporate ‘mattress gold’ into the financial system. For example, in 2011 the Central Bank of the Republic of Türkiye (CBRT) introduced a gold option to its Reserve Requirement Mechanism (RRM), leading to the development of gold banking. Banks drew physical gold into the system through gram gold accounts. However, the requirement to import gold in order to reach the targeted volume limited the release of existing under-the-pillow stocks. Although approximately 60 tonnes of gold were brought into the system in subsequent years through scrap gold campaigns organized by banks and collaborations with jewelers, society’s adoption of gold as a financial instrument remained limited.

Consequently, while these instruments have provided technical diversity, they have failed to fundamentally resolve the issue of gold held under mattresses, as they have not fostered the strong trust and behavioral transformation required to bring gold into the system without selling it or undermining the sense of ownership.

Why was It not successful enough?

This situation is better explained by structural factors relating to trust, behavior and perception than by a lack of technical tools. Research shows that a significant proportion of citizens view gold as ‘too valuable to entrust’ and are deeply mistrustful of handing it over to banks and the state. It is also important to highlight a paradox regarding trust. Although negative responses to calls to enter the system are driven by a lack of trust, it should also be noted that some citizens deliver their gold to local jewelers in the hope of making a profit.

Another reason is that the financial returns offered are not appealing to individuals. In a high inflation environment and at a time when gold prices were already rising strongly, the annual returns of 0–2.4 per cent offered on gold deposit accounts and gold bonds were not considered attractive; in some products, the fact that the return was in Turkish lira reinforced the feeling of relative loss when the gold price rose. Concerns about liquidity and access also played a part: while physical gold held at home can be converted into cash immediately, individuals perceived the maturity, procedures and physical delivery conditions in the banking system as a loss of flexibility.

In addition, the loss of craftsmanship and sentimental value when gold jewelery is brought into the system makes it difficult to convert gold, particularly family heirlooms, into financial instruments. The perception that registration could pose future risks through taxation, questioning or possible regulations has also led to a continued belief that keeping gold unregistered is ‘safer’. In these circumstances, the state’s objectives of strengthening reserves and financing have not been sufficiently aligned with individuals’ motivation to protect themselves from uncertainty.

International comparisons: The situation and models in other countries

International comparisons show that hoarding gold is not a universal problem. Rather, it is closely linked to a country’s cultural structures, the depth of its financial system, and the relationship between the state and its citizens. The issue is more prevalent in countries with a cultural affinity for gold. In contrast, in economies with robust financial infrastructures and high levels of trust, gold accumulation is not considered a policy issue.

International comparisons reveal that Türkiye and India have taken the most concrete steps towards incorporating gold held in private hands into the financial system, but the outcomes vary significantly between countries.

Leasing model

The gold leasing model is based on the principle of providing financing to the real economy without selling the gold held in people’s homes and without changing ownership. At the same time, it generates returns in gold for the owner of the gold. This approach aims to transform gold from a mere store of value into a productive asset. The model’s fundamental promise is that ‘gold earns gold’; in other words, investors focus not on monetary interest, but on increasing the amount of gold they hold.

Working principle of the gold leasing model

This structure is based on a three-way relationship between the gold-owning investor, the business using the gold and the intermediary platform. Investors entrust their physical gold to the platform for safe storage in vaults, and the gold is leased through the platform rather than directly. Payment in the form of gold returns is a critical element that eliminates inflation and currency risk.

Businesses that lease gold are usually jewelers, refiners, miners and industrial firms that use gold in their production processes. By leasing gold instead of purchasing it, these businesses can produce goods without tying up capital, gain natural protection against price fluctuations (hedging), and obtain off-balance-sheet financing. The lease term is usually short-term, but can be renewed if both parties are satisfied. The platform’s role is to match investors with businesses, perform risk analysis, manage contracts and provide secure storage.

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old surged past the $4,000 per ounce mark for the first time in history on Wednesday, extending its remarkable year-long rally as investors sought safety amid deepening global turmoil, renewed fears over government debt, and expectations of aggressive U.S. interest rate cuts.

Spot gold climbed 1.2% to $4,032.46 per ounce by 0653 GMT, while U.S. gold futures for December delivery rose 1.3% to $4,054.80. The milestone marks a dramatic ascent for the yellow metal, which has now gained more than 53% so far in 2025, making it one of the best-performing assets in global markets.

The record-breaking rally caps nearly two years of sustained momentum driven by geopolitical shocks, persistent inflation fears, and widespread skepticism over the stability of major economies.

A rush to safety amid global instability

Gold’s historic climb has been underpinned by what analysts describe as a “perfect storm” of market forces — ranging from central bank accumulation and falling real interest rates to political unrest and slowing growth in the United States, Europe, and Asia.

“Rising uncertainty levels tend to fuel gains in the gold price, and we are seeing that theme play out again,” said Tim Waterer, Chief Market Analyst at KCM Trade.
He added that the combination of a U.S. government shutdown, the prospect of lower Federal Reserve rates, and geopolitical instability have created ideal conditions for gold’s sustained rally.

The U.S. government entered its seventh day of shutdown on Tuesday, delaying the release of key economic indicators such as inflation and employment data. This has forced traders to rely on private and secondary reports to assess the economy’s health and gauge the Fed’s next move.

Investors are currently pricing in a 25-basis-point rate cut at the Federal Reserve’s upcoming policy meeting this month, followed by another quarter-point cut in December, according to futures data.

From 3,000 to 4,000: A year of record gains

Gold’s ascent above $4,000 marks the latest milestone in a relentless climb that began in early 2024, when the metal was trading below $2,600 per ounce. Since then, escalating wars, mounting sovereign debt, and a weakening U.S. dollar have driven investors to pour money into gold as both a store of value and a hedge against instability.

Traditionally seen as a safe haven during crises, gold has benefited from sustained demand from both institutional investors and central banks. According to the World Gold Council, central bank purchases of gold are on track to reach another annual record in 2025, led by China, Turkey, and India.

“There’s so much faith in this trade right now that the market will look for the next big round number — which is $5,000, especially if the Fed continues to lower rates,” said Tai Wong, an independent metals trader in New York.

He added, “There will be some bumps in the road, like a lasting truce in the Middle East or Ukraine, but the fundamental drivers — massive debt, reserve diversification, and a weaker dollar — are unlikely to change in the medium term.”

Rate cuts, debt fears, and ‘fear of missing out’

The gold rally is also being fueled by a psychological “fear of missing out” among investors, who are pouring into gold-backed exchange-traded funds (ETFs) and futures amid expectations of further monetary easing.

Major investment banks, including Goldman Sachs and UBS, have revised their gold price forecasts upwards, citing the likelihood of continued central bank buying and lower yields across global bond markets.

Gold’s spectacular rise has also been mirrored — though to a lesser extent — in other precious metals. Silver rose 1.6% to $48.57 per ounce, platinum gained 1.6% to $1,644.40, and palladium climbed 3.1% to $1,378.86, buoyed by the broader demand for tangible assets.

“The temptation to take profits around the $4,000 mark poses a potential short-term risk,” warned Waterer. “But the longer-term fundamentals remain bullish.”

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old has long been considered a safe haven asset. Together with foreign exchange reserves and assets, it forms an integral part of a country’s reserves. Gold can facilitate trade, either in national currencies or in digital currencies. Moreover, wars, geopolitical tensions, financial crises, and high price volatility can all lead to increased demand for gold. However, recently, political impulses have played a relatively greater role than fundamental supply-demand or arbitrage dynamics.

Gold has recently been the main instrument of political revolt against the U.S.-dominated financial order. The dominance of the U.S. dollar is increasingly being challenged by gold and digital currencies as well as the growing trend to trade in national currencies. Many emerging or developing economies are building up their gold reserves. Even the BRICS countries are now working on a new gold-backed reserve currency.

Other key risk factors driving demand for this precious metal include, but are not limited to, rising geopolitical tensions in the South China Sea, the Middle East, South America, and the war in Ukraine. In addition, the tendency to avoid sanctions, the impulse to avoid other external influences, and the fact that the dollar’s role as an international reserve currency is increasingly being replaced by gold, the euro, and the renminbi all contribute to the same end. Moreover, rising interest rates and realized losses due to decreasing market value of the treasuries in reserves is also raising demand for gold reserves.

Despite rising interest rates, there is still a general increase in market demand for gold due to the risk of a banking crisis, geopolitical risks, and the financial turmoil. Gold should therefore continue to be used for hedging against catastrophic scenarios. For all these reasons, this most archaic—for some, even barbarous—instrument of trade and investment has today become a modern instrument of hedging and even of revolt against the financial hegemony of the U.S. dollar.

The rush to gold reserves

Central banks around the world are building up their gold reserves. In fact, these purchases are at one of their highest levels since the 1960s (Fig. 1). Central banks now account for almost a third of monthly gold demand. Meanwhile, most of these record purchases in 2022 were made by central banks of countries at odds with the West. Central banks are reducing their dollar and even euro reserves and replacing them with more and more gold.

Sizable gold imports are now a reality in most developing countries as they seek greater economic and financial independence. In this vein, a huge current account deficit challenge is also a certainty: exports are strong, but imports are even stronger. Energy and other commodity imports (such as gold) are massive in emerging markets. Thus, imports, energy, and broader commodity dependence have led to a new current account deficit spree.

As shown in Figure 1, according to the World Gold Council, gold purchases rose 152% year-on-year to a record 1,136 tonnes in 2022. This buying cycle is expected to continue this year. However, in order to keep gold reserves free from the direct influence or intervention of other major external powers, it is better to keep gold within one’s country.

Russia’s recent experience of increasing its gold reserves is a good example. Russia has been gradually increasing its reserves for a long time, doubling them to $640 bn in the last five years alone. Especially since the annexation of Crimea in 2014, Russia has consistently reduced its dollar-denominated reserves and has tripled its gold reserves.

Brazil and France are also well known for their criticism of over-reliance on the U.S. dollar for trade and financial transactions. Many experts believe that countries and companies alike are now too dependent on the U.S. dollar as their main currency. Some, such as French President Macron, have even called it a “sovereignty issue.” EU members such as Poland and Hungary, two of the largest Eastern European countries, have also recently increased their gold reserves.

Indeed, major continental European countries such as France, Germany, and Italy, already hold around 60% of their reserves in gold (Fig. 2). Many others are already accumulating huge amounts of these gold reserves. Turkey, Germany, and Russia (even China and Iran) are steadily increasing their precious metal reserves as an independent tool against the financial dominance of the U.S. dollar.

Perhaps a similar idea was behind the gold reserves that Turkey has built up or withdrawn from the UK and the U.S., especially in the last 10 years (Fig. 2). Thanks to its recent attempts, Turkey is currently pushing for a place among the top 10 countries in the world in terms of gold reserves (Fig. 3).

Turkey’s gold reserves

Turkey has been accumulating gold reserves for a long time, mainly, among other things, in response to rising geopolitical tensions and increasing efforts to pursue an independent policy. According to the World Gold Council, the Turkish Central Bank has been accumulating gold reserves in a continuous cycle for at least the past few years. Meanwhile, Turkey has also been withdrawing its gold reserves from the U.S. and the UK. Today, as the importance of this precious metal has begun to grow, the value of these initiatives is clear.

Reserves are rising fast. Turkey has increased its gold reserves by 148 tonnes in 2022 to a total of 542 tonnes by the end of 2022 according to data from the World Gold Council. They bought another 30 tonnes of gold reserves in 2023 and as of the first quarter of 2023, has a total of 572 tonnes. Nearly a third of all its reserves (34%) are gold. Central Bank of Turkey (CBRT) statistics from June 2023 show that the Turkish Central Bank had $67 billion in foreign exchange reserves and $41 billion in gold reserves.

However, an extraordinary sale of more than 130 tonnes of gold to meet domestic demand in the second quarter of 2023 should also be noted. Though, thanks to its recent bullion moves, Turkey is closer today (more than ever) to being among the top 10 countries in gold reserves (Figure 3). The withdrawal of gold reserves from abroad, on the other hand, had been on the agenda in Turkey since at least the 1960s; however, it held the potential to leave the country in deep political turmoil.

Other developing economies

The sanctions against Russia have surely led to great concerns about where to keep international reserves, especially among the central banks of countries that are not aligned with the West. The sanctions following the war in Ukraine froze almost $300 bn of Russian reserves held abroad. Russia was able to use its huge gold reserves even during the sanctions in 2022, but most other international reserves were frozen. If these reserves were in bullion and held at home, they would not have been affected by the sanctions.

Following the invasion of Crimea, Russia has made an even more assertive attempt to diversify its reserves and other countries may follow suit. This de-dollarization trend, or shift away from U.S. assets, could in turn have major implications for the role of the U.S. dollar, its value relative to gold and other currencies, and its impact on the global economy.

Another example is China, which has increased its gold reserves to more than 2,000 tonnes for the first time in history. India is the world’s number one gold buyer with Indian consumers accounting for almost 20% of global demand per annum. China, Russia, and India are building up huge gold reserves. Together, these BRICS economies are making no secret of their ambition to find an alternative to the currently dominant U.S. dollar and are even looking for a new gold-based global reserve currency.