The Bank of France has partnered with U.S. banking group JPMorgan to expand its range of gold bullion services for central banks, sources familiar with the matter said on Monday.
The French central bank’s second deputy governor Sylvie Goulard wrote in the Alchemist, the magazine of the London Bullion Market Association (LBMA), that it had partnered with “a large commercial bank” to offer swaps, leases and gold deposits from Paris.
Sources said the bank was JPMorgan, one of the world’s largest bullion trading banks and a member of a group that settles trades in London’s $25 billion a day gold market.
The Bank of England acts as a gold custodian and service provider for many other central banks and has the advantage of operating within the London market, by far the world’s largest commercial bullion trading pool.
Until now central banks holding gold at the Bank of France had to go through London if they wanted to perform market transactions.
JPMorgan said it had “opened an account with Bank of France” and declined to comment further. The Bank of France declined to comment.
One source said the Bank of France was positioning itself to take advantage of uncertainty over Britain’s withdrawal from the EU, thinking that some central banks may seek alternatives to London.
“They are convinced that Brexit is going to change things and they want to be there,” the source said. “They are pitching to European potential customers.”
Such a move would fit into a wider push by Paris to become a European financial markets hub after Brexit. The head of the Bank of France said in May it aimed to be “the markets’ central bank in Europe”.
The Bank of France began to expand gold services in 2012, Goulard said in the Alchemist article. It is also renovating its vaults to allow operations by heavy forklift trucks, and upgrading the quality of its gold reserves so they can trade on the international market, she said.