‘Goldfinger’ 2021 plot twist could be villainous for banks

‘Goldfinger’ 2021 plot twist could be villainous for banks

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In the plot to the 1964 James Bond classic, international gold smuggler Auric Goldfinger hatches a dastardly plan to enrich himself and his outsized gold holdings by setting off a Chinese-made atomic bomb at Fort Knox, the home of the US gold reserve.

Goldfinger’s rationale is that the nuclear fallout will render the US bullion unusable for many decades, impeding its mobility through the international financial system, and in so doing lift the value of his own unaffected supplies, thus making him the richest man in the world.

It’s a crazy plan by anyone’s standards. And yet, the bifurcation at its heart may have more relevance to 2021 than many appreciate.

Why? Under the new Basel III banking framework, which came into force for all bullion centres other than London in June, not all gold assets will be considered equal.

In compliance with the net stable funding ratio (NSFR) rule, bullion held by banks in unallocated form will fail to qualify as a zero-risk asset. This means only gold that can be demonstrably allocated to specific entities will be considered safe enough to qualify for net stable funding purposes (ie