The economist David Dodge, the former seventh governor of the Bank of Canada, says gold is an “antique instrument,” and he believes Canada’s central bank got rid of its gold reserves for this very reason. Despite saying gold is an outdated financial tool, Dodge said that the leading crypto asset bitcoin (BTC) has no place in the Bank of Canada’s reserves.
David Dodge: The Bank of Canada ‘Holding This Antique Instrument of Stability Called Gold Really Didn’t Make Any Sense’
David Dodge, the former seventh governor of the Bank of Canada (BofC), thinks gold is an antiquated payment tool and that it’s costly to store. Dodge and Kitco News correspondent David Lin spoke on Thursday about shiny yellow gold.
According to Dodge, gold is an archaic instrument and Canada’s central bank was correct to get rid of it all. Canada is the G7 country that has no gold reserves. The Canadian central bank’s gold-selling trend started in the early 2000s and by 2016, Ottawa had sold most of its gold reserves.
“[The] issue is quite clear, that it costs to hold gold, whereas holding U.S. or Chinese or Euro bonds yields you a return,” Dodge told Lin on Thursday afternoon. “…That was a strong view. And a view that our international monetary system was in a place that was sufficiently robust, that holding this antique instrument of stability called ‘gold’ really didn’t make any sense.”
Dodge Believes in Reducing Transaction Costs, Says the Issue of Digital Currencies ‘Is a Very Important Issue’
Canada was following in the United Kingdom’s footsteps when half of its gold assets were sold, or 395 tons of gold between 1999 and 2002. U.K. citizens called the event “Brown’s Bottom,” named after the Chancellor of the Exchequer from 1997 to 2007, Gordon Brown. Canada getting rid of gold was dubbed “Poloz’s Bottom,” named after the ninth BofC governor, Stephen Poloz. During his Thursday conversation with Kitco News, Dodge also spoke about digital currencies such as bitcoin.
Dodge doesn’t believe bitcoin (BTC) deserves a spot in the BofC’s reserves, but the former central bank governor did not dismiss crypto assets. “The issue of digital currencies is a very important issue,” Dodge said. “[What]It is something we want to do globally. [in Canada], is to reduce transaction costs… [The] Bank and the Department of Finance are working hard… on this issue of digitalizing our financial system to reduce transaction costs… The financial system is interested in digitizing the Canadian dollar.”
How do you feel about David Dodge’s comments about digital currencies and gold? Is it your opinion? Please comment below on your views.
Images CreditsShutterstock. Pixabay. Wiki Commons
DisclaimerThis information is provided for educational purposes only. This article is not intended to be a solicitation or offer to sell or buy any product, service, or company. Bitcoin.com doesn’t offer investment, tax or legal advice. This article does not contain any information, products, or advice that can be used to cause or alleged result in any kind of damage.