Russia Now Has World’s Fourth Largest Gold Reserves and Foreign Exchange Assets

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Russia is now ranked in the global top four countries in terms of gold and foreign exchange reserves with a total of US$582 billion. These indicators are based on the analysis of data from various Central Banks and include in the top five China (US$3.31 trillion), Japan (US$1.27 trillion), Switzerland (US$924 billion) and India (US$563 billion). Sixth is Saudi Arabia (US$460 billion), which overtook Hong Kong (US$424 billion) and South Korea (US$424 billion) last year. We examine what this means and why the Russian reserves are growing.


At the end of last year, in terms of accumulated reserves, Singapore left the top ten, behind Brazil (US$325 billion) and Germany (US$295 billion). In 2022, according to the results of the first half of the year, Russia lost to India, but then returned to fourth place by the year end.  Meanwhile, in the top 30, a newcomer appeared – Sweden, which ousted the Netherlands.

In the spring of 2022, Western countries froze US$300 billion from Russian gold reserves held overseas, reckoned to be about 50% of Russia’s total. In response to these actions, Russia has blocked foreign assets held in Russia by ‘unfriendly countries’ in response.

The main goal of the Western sanctions in terms of freezing economic assets was to weaken the now strengthened Russian Ruble. This meant that the frozen assets cannot be used for foreign exchange interventions if it is necessary to reduce volatility in the foreign exchange market. In fact, from the liquid foreign exchange reserves, only the Chinese RMB Yuan, as well as monetary gold, remained in Russia’s possession. Despite the record current account surplus of Russia in 2022, the Central Bank of Russia did not purchase replacement foreign currency in its international reserves. Instead, Russia’s recovery was due to the revaluation of assets in US dollars.

Russia has also changed its national budgeting. In 2023, a new version of the Russian budget and its rules has been launched. Now, Russian reserves will be replenished in Chinese RMB Yuan if oil and gas revenues are above the base level. Conversely, the RMB Yuan reserves will be used to compensate for lost oil and gas revenues, as is currently the case.

Yulia Makarenko, a Deputy Director with the Russian Banking Development Institute agrees, saying that “Despite the geopolitical situation, Russia has managed to maintain its place in the ranking of countries with the largest gold reserves. This indicates the high professionalism of decision-makers in the structure of the Central Bank. There were several difficult moments throughout 2022, and it was possible to avoid panic due to these controversial decisions. But looking back, it has become obvious that these were the right decisions (key rate manipulation, rules for selling part of the proceeds for exporters, a budget rule, and so on). To some extent we have had to start again, as our control over half our own assets has been lost. When this will return and whether control of our own assets ever returns at all is all unknown. Our planning therefore was to discount all our frozen reserves. We took this pain in 2022.”

The China and United States Positions

China’s position at number one is an indicator of the scale of the economy. China has been the leader in terms of gold and foreign exchange reserves for the 17th year in a row, while the gap from China to the second place is more than twofold. This means that for the foreseeable future, no-one will be able to catch up with China’s reserves.

Remarkably, the United States is not even in the top ten with its underwhelming US$37.2 billion. Ahead, are countries such as Brazil, Mexico, and Israel. This could become problematic as the US has been using a debt-backed asset model and has been borrowing money instead of developing assets. That debt is now US$31.4 trillion and has just been reached as a legally permissible maximum. Negotiations are currently on-going in the United States to extend this amount even further. Dire warnings are being forecast if this matter is not resolved.

The volume of gold reserves is an indirect indicator of the strength and stability of an economy, however, coupled with a public debt in excess of US$30 trillion, one can judge a significant and potentially catastrophic imbalance has occurred in the United States. During the global shocks that occurred in 2020, the strongest economy in the world, the United States was in fact poorly supported by real money in circulation and in reserve and may not be as strong as it suggests in the face of new economic pressures.

Russia’s Increasing Reserves

Concerning the sanctions and freezing of sovereign assets, there has never been precedent for the transfer of assets of a foreign Central Bank to be transferred to a third country, as the US is suggesting should happen to Russian assets. Washington has been talking about Ukraine, but it could also justify the use or even pass laws to expropriate Russia’s assets to prop up its own debt. That would probably incur a serious penalty as other countries would seek to have their assets withdrawn from US security and ‘protection’. Many nations are highly concerned that what has happened to Russia’s assets – which are owned by the Russian people, not its government – happens to them.

Russia meanwhile over the years has long maintained a high level of international reserves. This is a sign that the country does not have to actively sell the currency to ensure financial stability and fill the domestic market, which is ensured by a high level of exports and slightly reduced imports.

But as more than half of Russia’s international reserves are frozen in the EU and G7 countries, any sudden need to use them will be out of the question. The increasing of Russian reserves will instead help to urgently allocate funds for emergency needs, and the Russian Ministry of Finance will continue to build up domestic Ruble debt to cover any budget deficit.

The Gold Risk

But gold isn’t the only solution. Alexander Abramov, head of the laboratory for the analysis of institutions and financial markets at the Institute for Applied Economic Research of the Académie Russe de L’économie Nationale (RANEPA), says that the position of countries in the rating of gold and foreign exchange savings is indicative of several contradictory trends.  “The accumulation of gold reserves increases the financial stability of the state, meaning there is a reserve in liquid assets that can be sold on the market to friendly countries if something happens. However, from the point of view of investment attractiveness, I would treat gold with caution. Gold often behaves in the same way as all risky assets: that is, with the growth of the market, it rises, with a fall, it falls. And this reduces its accumulation value.

If the economy recovers, the value of gold decreases. And I think that, despite the difficult year 2023, in 2024 the global economy will recover. That means that other assets – stocks, government securities, corporate bonds, and so on – are growing faster.”

If so, balancing the need for holding gold reserves will probably mean Russian slowly increasing reserves of RMB Yuan and other strategic currencies – most likely in the Middle East and South Asia.

This article was translated and adapted from the Izvestia website piece entitled Методом пробы: Россия заняла четвертое место по золотовалютным резервам and published on January 7, 2023.    

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