The Reserve Bank of India (RBI,) India’s central bank, has announced a gold swap scheme to help with domestic shortages of physical gold, while moving some of its reserves to the Bank of England.
Under the plan, non-standard gold bars, some of which date back to India’s days as a British colony, will be sold to banks. In return, the central bank will get standard “Good Delivery” bars in its account at the Bank of England, in London.
Having the gold at one of the world’s largest forex centers will allow the RBI to more easily defend the rupee in international currency markets, by using the gold as collateral. According to the World Gold Council, India’s central bank gold reserves are the 11th-largest in the world, at 557 metric tons.