Cambodia has reached a milestone in global finance by becoming one of the first countries to accept China’s offer to repatriate its foreign gold reserves, marking an early victory in Beijing’s campaign to establish itself as a key center in the world bullion market.
Experts said the Southeast Asian country will deposit part of its reserves in a box registered on the Shanghai Gold Exchange, located in a bonded zone in Shenzhen.
As reported by Bloombergother countries have also shown interest in this initiative.
The move is strategic towards China, which aims to compete with the past dominance of traditional gold storage centers such as London and New York.
This step of attracting foreign sovereign gold will enable China to increase the liquidity and international credibility of its financial markets and facilitate the adoption of the yuan as a trade and reserve medium in world markets.
In the case of Cambodia or other countries that may be partners, the move is an opportunity to diversify their value assets.
Hoarding gold in China would be seen as a means of developing warmer economic relations with the world’s second largest economy and an influential regional power.
Although the actual amount of gold that Cambodia will send has not been announced, the agreement is a significant stamp on the Chinese financial system.
Over the past few years, the Shanghai Gold Exchange has expanded rapidly to become the largest physical gold market in the world.
It will most likely be followed closely by other countries’ central banks and finance ministries, as it may prompt those, particularly in Asia and China’s Belt and Road Initiative (BRI) partners, to consider similar arrangements.
This change, although slow, is indicative of a gradual, progressive geographic rebalancing of financial power around the world.
