Aleš Michl, the Prime Minister of the Czech Republic, told a national newspaper that he intends to nearly quadruple the central bank’s gold holdings from 11 tons to about 100 tons. In addition, he plans to ask the Czech National Bank’s foreign exchange reserve management team to invest in stocks. In an effort to grow its gold holdings, the central bank hopes to make the current 11 tons its goal of 100 tons or more.
The country’s central bank intends to gradually increase its holdings of precious metals, such as gold and silver, from the current 11 tons to 100 tons or more, the new Governor noted.
A plan that would increase the gold reserves by a factor of ten prompted one journalist to note that the president of the Central Bank is following the example of European central banks that have bought more or repatriated gold.
For example, in 2018, the Hungarian National Bank reported that its gold holdings increased tenfold. The National Bank of Poland has increased its gold collection, too, according to reports.
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This is not the only news concerning the Czech National Bank. The President of the Czech Republic has named three new board members for the seven-member board of the Czech National Bank.
Czech National Bank and its governing board
Following the appointment of the new Governor, the Czech Republic’s president has reshaped the board in a more hawkish direction, though some on the board believe the country’s central bank should move sooner rather than later to end the recent increase in interest rates.
Eva Zamrazilova, Jan Frait, and Karina Kubel kova are new members of the governing board.
Zamrazilova is the current chair of the National Budget Council and she served on the CNB board from 2008 to 2014. Jan Frait is also not a new figure. He is the director of the central bank’s Financial Stability Department. Frait is also a former CNB board member (2000 to 2006). The third new member is Karina Kubelkova. Klara Kubel kova is the prime minister’s chief advisor, as well as the lead analyst at the Czech Chamber of Commerce.
Former Deputy Governor Tomas Nidetzky , CNB Governor Jiri Rusnok, and board member Vojtech Benda will all finish their mandates this month. While both Benda and Nidetzky were able to renew their terms, Milos Zeman, Czech President, chose to nominate new members closer to his desired, less bureaucratic path. The new Governor will conduct a more accommodative monetary policy than Jiri Rusnok.
Governor Jiri Rusnok said at the central bank’s last meeting on June 22, that the base rate will likely be raised by 0.75% or more.
After CNB became the first bank in the European Union to increase interest rates in 2021, it led Hungary’s National Bank to do the same. In the beginning of May, the Czech National Bank raised its rates to their highest level since 1999, by 0.75pp to 5.75%.