The role of gold reserves in strengthening Jordan’s economic stability

Gold reserves in central banks are not just strategic assets; they are also a crucial tool of monetary policy, providing flexibility in navigating economic fluctuations. Among rising geopolitical risks in the region and financial market volatility, gold serves as an effective hedge for the Central Bank of Jordan (CBJ) against inflation and foreign currency instability. A strong gold reserve plays a vital role in maintaining the stability of the Jordanian dinar and supporting economic confidence.

However, as often happens, misleading rumours regarding the CBJ gold holdings have recently surfaced. These claims, typically based on inaccurate analysis or exaggerated interpretations, risk distorting public perception. Leaving such misinformation unaddressed can impact confidence in the economy, making it essential to clarify the facts and dispel any misconceptions.

The Central Bank of Jordan manages its assets in accordance with its legal framework, monetary policy goals, and investment strategy, which is approved by the Board of Directors. It follows a well-balanced approach, ensuring a mix between liquid short-term deposits and long-term investments to optimize returns while maintaining sufficient liquidity. The bank prioritizes security and liquidity before returns, investing in highly rated sovereign bonds, liquid foreign deposits, and diversified assets to mitigate market risks. Additionally, its investment committee continuously reviews and adjusts the asset portfolio to respond to changes in global interest rates, exchange rates, and credit conditions.

Gold is a key component of this strategy. Like central banks worldwide, the Central Bank of Jordan engages in controlled gold trading, selling limited amounts when global prices rise and repurchasing when prices decline. This routine practice helps maintain foreign reserves, generate capital gains to cover monetary policy costs, and contribute 80% of the bank’s profits to the treasury, as mandated by law.

Official data clearly demonstrate the Central Bank’s prudent management of its gold reserves. According to its publicly available monthly statistical bulletin, gold holdings have increased sixfold since 2010, from 0.41 million ounces worth JD412 million to 2.318 million ounces valued at JD4.8 billion as of February 2025. In 2024, the bank achieved record profits, allowing it to increase its capital and transfer JD75.2 million to the treasury.

Beyond gold, Jordan’s total foreign reserves have surpassed $21 billion, providing a robust buffer against global economic shocks and reinforcing investor confidence in the country’s financial stability.

Is the Central Bank hiding data from the public, researchers, and market participants? The answer is a clear no. The bank operates with full transparency, publishing monthly reports detailing the value and composition of its foreign reserves. These reports are publicly accessible on its website, ensuring that economic stakeholders can track developments based on official, verified data.

The bank's adherence to good governance and financial disclosure strengthens confidence in its policies. Any analysis that does not rely on these official reports should be treated as speculation that could unnecessarily undermine trust in the economy.

In an era where misinformation spreads quickly, it is crucial to approach economic discussions with objectivity and reliance on official data. Speculation and unfounded claims—especially from non-experts—only serve to undermine confidence in the national economy. The facts, however, tell a different story: the Central Bank of Jordan has successfully managed its gold reserves, reinforced its foreign currency holdings, and strengthened Jordan’s financial position.

By focusing on facts rather than rumors, Jordan can continue to navigate economic challenges with confidence, ensuring a stable foundation for future growth and prosperity.

Raad Mahmoud Al-Tal is head of the Economics Department – University of Jordan- r.tal@ju.edu.jo