Cambodia has achieved 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 global gold market.
Experts said the Southeast Asian country would deposit part of its reserves in a vault registered at the Shanghai Gold Exchange, located in a bonded zone in Shenzhen.
As reported Bloombergother countries have also expressed interest in this initiative.
This move is strategic towards China, aiming to rival the past dominance of traditional gold storage hubs such as London and New York.
This move to attract 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 medium of exchange and reserve in global markets.
In the case of Cambodia or other countries that could be partners, offshoring is an opportunity to diversify their valuable assets.
China’s gold hoarding would be seen as a way to develop warmer economic relations with the world’s second-largest economy and an influential regional power.
Although the actual volume of gold that Cambodia will send has not been announced, the agreement represents a significant endorsement of the Chinese financial system.
In recent years, the Shanghai Gold Exchange has grown rapidly to become the world’s largest physical gold market.
It will most likely be closely watched by central banks and finance ministries in other countries, as it could prompt them, particularly in Asia and China’s Belt and Road Initiative (BRI) partner countries, to consider similar arrangements.
This change, although slow, is a sign of a gradual and progressive geographic rebalancing of financial power across the world.
