Central banks hold gold as part of their country’s national reserves. A national reserve is the money held to help a central bank keep the economy trusted and liquid and to back up the value of the currency that central bank prints. Typically, a central bank will hold a number of other reserve currencies as well as its own, usually US dollars, euros, Japanese yen, British pounds and Swiss francs as well as gold.
It is now possible for individuals to hold gold as well as multiple other currencies. However, unlike central banks this gold can now be spent as money. By holding gold, individuals can offset the risk of inflation in volatile currencies. Typically, as a fiat currency such as the pound or the dollar, decreases in value, the price of gold in that currency goes up. That is why central banks will have gold, to maintain the value of their national reserves – something individuals can now also do.
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