Explanation – Many governments, including India, maintain their gold reserves in foreign vaults to mitigate risks associated with geopolitical tensions and ensure the safety and accessibility of their reserves. Storing gold in multiple locations around the world, particularly in key financial hubs like London, New York, and Zurich, helps protect these reserves from regional conflicts or instability that might affect their safety if stored solely within the home country. Additionally, these locations facilitate easier access for international transactions and financial operations. Moreover, the RBI has brought back 100 tonnes of Gold from the Vault of UK to India. This is a major shift in the Economic Policy of the RBI, as it will now hold most of its Gold in its own vault. By bringing back gold reserves, the RBI signals its confidence in the Indian economy’s stability and resilience. Holding gold domestically enhances India’s monetary stability, providing a buffer against economic shocks and currency volatility. It will also enhance India’s economic sovereignty.

Source: AIR