From Wolf Street, November 15:
In the feverish reshuffling of financial services for a post-Brexit world, London still comes out ahead, but less so.
As two years of Brexit negotiations finally come to a head and all eyes are on British Prime Minister Theresa May’s frantic efforts to get the draft deal passed, France is making a big move on the City of London’s gold market. As Reuters reported Monday, the Bank of France has partnered with mega-bank JP Morgan Chase, one of the world’s largest bullion trading banks, to offer global central banks and sovereign wealth funds the full gamut of swaps, leases, and gold deposits....MORE
Sylvie Goulard, the Bank of France’s deputy governor, recently wrote in The Alchemist, the in-house journal for the London Bullion Market Association (LBMA), that Paris is looking to reestablish itself as a mover and shaker in the international bullion market. “While these gold investment services have until now only been offered from London, it recently became possible for the Banque de France to offer them also from Paris,” she said.
France is already the world’s fifth biggest sector gold holder, carrying around 2,435 tonnes of gold in its official reserves. But until now central banks holding gold at the Bank of France had to go through London, home to the world’s largest commercial bullion trading pool, if they wanted to perform market transactions.
But the Bank of France has been expanding its gold services. It has also refitted its bullion vaults to allow heavy forklift trucks to operate within their confines, and upgraded the quality of its gold reserves so they can trade on the international market. Its newly consummated partnership with JP Morgan, a member of a select group of global banks that settles trades in the LBMA, is the clearest sign yet that Paris wants a piece of London’s $25 billion-a-day gold bullion market.
France’s central bank has not been shy about its intentions. In May Bank of France Governor Francois Villeroy de Galhau announced that one of the central bank’s key aims is to become “the markets’ central bank in Europe” and that Brexit represented a “historic opportunity” to restructure the EU’s financial system. “In this respect, Paris has a lot of assets to become a major center for corporate finance and innovation in Europe,” he said....
