The World Gold Council (WGC) announced a proposal to introduce wholesale digital gold that would change the way gold is settled and broaden the yellow metal’s use as collateral.
In today’s wholesale market, gold trades are settled in two main structures. The first is allocated gold which involves direct ownership of specific physical bars but is operationally complex; and the second is unallocated gold, which has higher liquidity and lower costs, but may expose investors to the credit risk of the institution where the account is held.
The WGC has proposed a new way to settle gold, bridging the gap between these two structures via Pooled Gold Interests (PGI), which will provide physical ownership, just like allocated gold, but with new benefits to investors including:
- Broader and simplified use of gold, including as collateral
- Ownership of an interest in a pool of vaulted gold bars – even in small, fractional amounts
- Easy and secure transfer of gold interests between parties
Mike Oswin, global head of Market Structure and Innovation at World Gold Council, said in a statement: “Wholesale Digital Gold is a vision to transform the way gold is owned and traded…As the world’s leading gold trading hub, with the Loco London market clearing an average of 20 million ounces daily, the UK is well positioned to lead the way in improving the way gold is traded and cleared to the benefit of all market participants. Introducing a robust legal structure and innovative technology for gold ownership and settlement, will only reinforce London’s role in the global gold market.”
The Wholesale Digital Gold ecosystem is designed to be technology-neutral, supporting initiatives like World Gold Council and LBMA’s Gold Bar Integrity program. It also optimizes for regulatory compliance and capital efficiency.