Experts: Increasing the gold reserve would improve the confidence of investors in Romania. What the BNR says

The recent retrograde of Romania's credit rating by the International Agencies Standard & Poor's and Moody's put the country at the lowest level in the investment category, which could be avoided if we increase our international reserves, say the specialists.

Increasing the gold reserve would improve investors' confidence, some experts say. Photo archive

For our country, the alarm signal is all the more powerful as, in its last March 14, 2025 report, Moody's suggested the possibility of a new decrease, which would place Romania in the category of “junk” economies – not recommended for investments. This perspective has serious implications for the entire economy: higher loan costs, increasing pressure on the standard of living and the risk of reducing foreign investments, which could adversely affect the labor market. The assessments of the agencies emphasize the fiscal and macroeconomic instability, considering that Romania has the highest budget deficits and current account in the European Union, which increase its vulnerability in front of external shocks and difficulties in honoring financial obligations.

Although the Government of Romania does not have an insolvency history since 1983, the Moody's Agency warns that, in the absence of firm tax measures, there is a risk that this situation will change in 2025, especially in currency debts, for which the mechanisms against foreign risk are missing.

According to several studies conducted in the last two decades, a method of increasing creditors' confidence in a country is the increase of its gold reserves. Being an asset that offers stability when it is missing, the increase of gold holders signals to the investors the state attempt to enter a financially responsible path.

“Such a study is the one conducted by Sawan Ratch, Sanket Mohapatra and Arvind Sahay, who highlights not only that gold is an asset that increases the resilience of a country, but is an help to reduce global risks and those on country rating in periods of instability. According to the authors, the increase of the gold reserves in periods of instability – periods marked by debt crises, inflationary crises and foreign crises – is more effective in reducing the country's credit risk, than in periods of relative economic stability. However, considering that there is currently no transparency regarding the management of the gold reserves of the National Bank of Romania, we do not know if we will see an increase of the 103.6 tonnes of gold owned by the bank. Thus, although the mentioned study would help to ensure that Romania will not enter the “junk” category with countries like Morocco and Guatemala, we do not know if there will be any support from the NBR in this regard. “says Victor Dima, manager of the Tavex Romania treasury department.

US, strongly interested in gold

In May 2025, Moody's relegated the country's country rating, after similar decisions of Standard & Poor's and Fitch. Thus, the US has lost the status of AAA country rating, which only Germany, Luxembourg, Australia, Switzerland, Denmark, Liechtenstein, Netherland, Norway, Sweden, Singapore and Canada have now now. The decision was determined by the accelerated increase in interest costs, which now consume 18% of federal income, compared to 9% in 2021.

In the case of the United States, although it has officially marked the decrease in confidence in the ability of the US state to pay its debts, the Moody's announcement has not had important repercussions on capital markets. Even if there have been no significant sales of actions, but only for bonds, we see an increase in interest for investment gold. Capital exits from American Golden ETF have decreased significantly, from over two billion dollars to week 10 – 16, to just over 200 million in the next week.

“The tendency to diversify US credit risk is evident including when we look at investors' preferences. According to a poll published by Gallup in May, 23% of the Americans survey prefer gold as long -term investment. Compared to last year's survey, gold had a five percentage advance advance, exceeding even mutual actions and funds“Adds Victor Dima.

As for individual investors, it is important for them to diversify their portfolios, all the more so as the global economic instability is upward. The allocation of 10 – 20% of the portfolio of investment gold has the potential to reduce the losses caused by other assets, such as actions, bonds and even cryptocurrencies.

How much is worth the gold reserve of Romania

On December 31, 2024, the foreign exchange reserves at the National Bank of Romania were at the level of 62,135 million euros, compared to 61,174 million euros on November 30, 2024 and compared to 59,770 million euros on December 31, 2023.

The level of the gold reserve remained at 103.6 tons. Under the conditions of the evolutions of international prices, its value located at 8,356 million euros, compared to 8,399 million euros on November 30, 2024 and compared to 6,213 million euros on December 31, 2023.

The international reserves of Romania (currencies plus gold) on December 31, 2024 were 70,491 million euros, compared to 69,573 million euros on November 30, 2024 and compared to 65,983 million euros on December 31, 2023.

What does the gold reserve of a country use

International reserves, or currency reserves, are external assets, such as currency, gold or other assets, owned by the central bank of a country and available to be used if necessary. These reserves are essential to ensure the financial stability of a country, allowing the intervention on the currency market, covering the deficit of the balance of payments and honoring the external debts.

International reserves are necessary to achieve at least three important purposes for the country: (1) Management of financial crises, (2) Receiving and repayment of external credits and (3) attracting investments.

International reserves can be considered an insurance fund or a safety net that allows the economy to protect from external shocks.

Another use of international reserves is the service of external public debt. The state collects its income in lei (from taxes and taxes), but must repay external foreign currency loans. Therefore, when the Ministry of Finance repays an external loan or pays interest on this loan, payments are made on the account of international reserves. Thus, the reserves make possible the payment of external debts. In their hypothetical absence, the failure to fulfill the financial obligations by the state would lead to the deterioration of the country's rating and to the impossibility to obtain the external financing to cover the budgetary expenses.

Also, the volume of international reserves has a major impact on the reputation of a country and its attractiveness for investors. When the country has sufficient international reserves, foreign investors are sure that, if they want to withdraw their investments or repatriate profits in foreign currency, they can do it at any time, without significant losses caused by the fluctuary fluctuations. The inability of a country to provide investors This certainty due to insufficient international reserves can cause reducing new investments or closing foreign capital companies.

Why not expand BNR Gold Reserves

The National Bank of Romania (BNR) can decide, through the International Reserve Administration Committee, the increase of the gold reserve of Romania, according to the response offered by the bank officials at the request “truth”.

“Currently, it is considered that the level of the gold reserve of Romania is an adequate one, considering that it is about 11% of the international reserve, compared to 10% as it is recommended”, have declared for “truth”BNR representatives.

In addition, as the BNR governor, Mugur Isarescu, said on numerous lines, one of the main strategies of the central bank is to ensure liquidity for financial markets – mainly, to foreign currency.