The World Gold Council (WGC) and the London Bullion Market Association (LBMA) have jointly introduced a dedicated High-Quality Liquid Asset (HQLA) platform, marking a significant step in their push to secure a stronger regulatory standing for gold within the Basel III framework.
The newly launched platform serves as a centralized hub for research, data insights, and market analysis, all aimed at reinforcing the argument for gold’s classification as a Level 1 HQLA—a category reserved for the most liquid and reliable financial assets.
Recent studies highlighted on the platform suggest that gold demonstrates many of the core attributes required for such classification. These include deep market liquidity, price stability, and resilience during periods of financial stress. In some cases, gold’s performance metrics—such as trading volumes, bid-ask spreads, and volatility—have been comparable to or even stronger than US Treasuries, which currently enjoy Level 1 HQLA status.
However, despite these characteristics, gold is still excluded from Basel III liquidity buffers and is assigned a relatively high Required Stable Funding (RSF) factor of 85%, limiting its recognition as a cash-equivalent asset in banking regulations.
Through this initiative, WGC and LBMA aim to present a data-driven and transparent case for revisiting gold’s regulatory treatment. They emphasize that gold’s global acceptance, high liquidity, and absence of credit risk make it a strong candidate for inclusion as a core liquidity asset—particularly in times of economic uncertainty.
The move signals a coordinated industry effort to reshape how gold is perceived within modern financial systems, potentially unlocking new avenues for its use in institutional portfolios and banking liquidity management.
Disclaimer: This information has been collected through secondary research and TJM Media Pvt Ltd. is not responsible for any errors in the same.
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