TCMB Governor Fatih Karahan's Assessment on Global Economy and Gold in Budapest

During his presentation in Budapest, Central Bank of the Republic of Turkey Governor Fatih Karahan evaluated recent developments in the global economy and stated that geopolitical risks directly affect central banks' reserve management and gold preferences.

Globalization and Geopolitical Risks

Central Bank of the Republic of Turkey Governor Fatih Karahan evaluated recent developments in the global economy during his presentation in Budapest. Karahan stated that with economic relations becoming an element of geopolitical competition, the deepening of globalization can no longer be taken for granted.

Economic Shocks and Monetary Policy

Pointing out that economic shocks stemming from strategic competition could persist for longer, Karahan stated that a period has been entered in which central banks face larger and more prolonged shocks.

Stating that monetary policy should focus on the effects of the shock, Karahan noted that fiscal and monetary policies can be used to complement each other.

Emphasis on Access in Reserve Management

Placing emphasis on access in reserve management, Karahan said that geopolitical risks and uncertainties regarding market access have changed reserve managers' preferences.

Emphasizing that the US dollar is still the dominant and consensus currency, Karahan stated that the element of access should be added to reserve management alongside security, liquidity, and return.

Central Banks' Demand for Gold

Stating that central banks' demand for gold is high, Karahan indicated that the share of gold in reserves has risen from 11 percent in the 2020s to 29 percent.