Tanzania's Gold Reserve Needs Global Standardization to Strengthen Shilling
The Bank of Tanzania's gold purchasing program aims to strengthen the national currency against external shocks. However, experts warn that merely accumulating raw gold in central vaults is not enough.
Central banks globally are expanding their gold reserves as a hedge against US dollar volatility. Financial analyst Hilderbrand Shayo notes that 'merely holding market-recognised monetary gold' does not enhance monetary credibility unless it meets international certification standards.
The Bank of Tanzania needs to rigorously standardize its gold reserve, making it globally liquid and verifiable. This includes adhering to London Bullion Market Association (LBMA) 'Good Delivery' standards for purity and serialisation with unique traceable numbers to prevent the circulation of conflict minerals and ensure compliance with AML protocols.
The Tanzanian central bank should learn from global precedents, where serialisation is a crucial aspect of reserve management. For instance, when the Bank of England or US Federal Reserve audits their custodial gold, the exact serial numbers correspond to specific sovereign owners, allowing for rapid currency interventions and collateral in swap agreements.
The establishment of local gold refineries in Tanzania, such as those in Mwanza and Geita, is a step in the right direction. However, these facilities must secure and maintain international accreditation to render their output globally liquid.