The French central bank has sold the last batch of gold stored in New York, and France's gold reserves are now fully consolidated domestically.

Ask AI · Why can an arbitrage mechanism bring France massive returns?

【Global Times, compiled report】Global central banks are accelerating the construction of a gold-led U.S. dollar hedging system. This trend pushed the gold price to set repeated new highs last year. At the same time, some Western countries have also grown uneasy about having large amounts of gold custodied in the United States.

According to a report by France’s Le Nouvel Forum on the 7th, against this backdrop, the Banque de France (France’s central bank) implemented a “gold swap” operation, consolidating all of its gold reserves domestically.

The Banque de France recently announced that it has completed the replacement of 129 tons of gold that had been stored for many years in the vault of the Federal Reserve Bank of New York. This batch of gold has been custodied in New York since the late 1920s, accounting for 5% of France’s total gold bullion reserves. The operation was carried out in 26 stages and was completed between July 2025 and January 2026. The Banque de France sold these gold bars in New York at market prices, while purchasing an equivalent amount of gold in Europe that met current standards and transporting it back to Paris. By then, France’s total gold reserves of 2,437 tons have all been consolidated within its own territory.

Banque de France Governor De Gajiao said the move was based on technical and liquidity considerations, denying any political motives. The gold bars originally stored in New York were mostly old, non-standard specifications and did not meet the 99.99% purity standard required by the London Bullion Market Association (LBMA). If the bars were returned directly to France, cross-Atlantic logistics costs would be extremely high, and it would also be impractical to melt and refine them on the spot. Therefore, the Banque de France chose an arbitrage solution: sell the old gold bars in New York and buy new gold bars in Europe. Because the gold price surged sharply during the transaction period, this “buy low, sell high” operation generated a total of 12.8 billion euros in gains for France.

The report says this French case also provides valuable strategic reference for other countries that have large amounts of gold custodied in the United States, such as Germany (about 37% of its gold reserves are stored in the U.S.). (Zhang Jiayin)