Regulators Let Banks Count Physical Gold as Reserves
Federal Reserve, FDIC and OCC approve Basel III rules allowing gold to qualify as tier-one liquid assets alongside Treasuries.
Updated on Nov. 4, 2026 in Stock Markets
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The Federal Reserve, FDIC and Office of the Comptroller of the Currency signed off on Basel III implementation that permits banks to count physical gold among tier-one liquid assets. Previously, banks were largely restricted to holding U.S. Treasuries to meet those requirements, and the new guidelines took effect the week before the broadcast.
Why it matters
The change could shift how banks hold reserves, potentially moving funds out of Treasuries and into bullion. Analyst David Fischer has predicted portfolio managers will increasingly allocate toward gold, a shift that could affect demand in both markets.
The Treasury market fell 5% and gold rose 65% over the prior year, according to figures cited in the broadcast. The $10,000 gold price is a hypothetical outcome if just 1% of Treasury holdings moved into bullion, and the extent of any actual bank reallocation remains unknown.
The players
Federal Reserve
The central bank of the United States, which oversees monetary policy and supervises banks, and which signed off on Basel III implementation.
Federal Deposit Insurance Corporation (FDIC)
The federal agency that insures bank deposits and supervises state-chartered banks, and which also approved Basel III implementation.
Office of the Comptroller of the Currency (OCC)
The bureau within the U.S. Treasury Department that charters and supervises national banks, and which also signed off on the new rules.
David Fischer
An analyst who predicts banks may shift holdings from Treasuries to physical gold under the new requirements.
The details
Basel III was originally introduced in 2010 by the Bank for International Settlements. Under the newly approved guidelines, financial institutions can count physical gold alongside Treasuries when meeting tier-one liquid asset requirements, a change from earlier frameworks that largely limited banks to government bonds.
Timeline
2010: Bank for International Settlements introduces the Basel III framework.
Prior year: Treasury market declines 5% while gold rises 65%.
Last week: New banking requirements allowing physical gold as reserves take effect.
Market Dynamics
The approval extends the Basel III framework, first introduced by the Bank for International Settlements in 2010, by broadening tier-one liquid assets beyond U.S. Treasuries. It marks a departure from the earlier rules that effectively confined bank reserves to government debt.
Investors holding Treasury-linked funds or gold exposure may see portfolio effects if banks reallocate reserves. Retail investors should watch how quickly institutions actually shift holdings before adjusting allocations.
The takeaway
Banks can now count physical gold alongside Treasuries as reserves, but how much they actually move remains an open question. Watching reported reserve holdings over the coming quarters will show whether the rule change has a measurable effect on either market.
Further reading
For broader context on how reserve rules shape trading, see Stock Markets coverage.
Source note: This article includes information reported by The Flag - AM 1100 and FM 92.3 WZFG.
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