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 hub in the global bullion market.
Experts stated that the Southeast Asian country will deposit part of its reserves in a vault registered with the Shanghai Gold Exchange, located in a customs zone in Shenzhen.
As reported by BloombergOther countries have also shown interest in this initiative.
The move is strategic towards China and aims to rival the past dominance of traditional gold storage centers such as London and New York.
This step of attracting foreign sovereign gold will allow China to increase the liquidity and international credibility of its financial markets and facilitate the adoption of the yuan as a means of trade and reserve in global markets.
In the case of Cambodia or other potential partner countries, relocation is an opportunity to diversify your valuable assets.
China’s gold hoarding would be seen as a means to develop warmer economic relations with the world’s second-largest economy and an influential regional power.
Although the actual volume of gold Cambodia will send has not been announced, the deal is an important seal of approval from the Chinese financial system.
In recent years, the Shanghai Gold Exchange has rapidly expanded to become the largest physical gold market in the world.
It will most likely be closely watched by central banks and finance ministries in other countries as it could prompt them, especially in Asia and China’s Belt and Road Initiative (BRI) partners, to consider similar deals.
This change, although slow, is an indication of a gradual and progressive geographical rebalancing of financial power around the world.
