Venezuela has filed a major $1 billion lawsuit against the Bank of England and claims that the central bank is refusing to release the gold owed.
Venezuela has used the Bank of England for decades to store its bullion, but now it’s having a problem retrieving it. [Financial Times]
In late 2018, the country tried to retrieve its gold from Bank of England but it refused. The grounds for the refusal is that the United Kingdom does not recognize Nicolas Maduro as its legitimate leader.
Venezuela has since tried other tactics, such as retrieving the funds as part of the United National Development Programme (UNDP) to ‘combat COVID-19’ but this was also denied.
Whether or not Venezuela’s political system is corrupt is not really the central concern here. Instead, the dispute underscores how gold has to be stored. Oftentimes, certain nations hold the reserves for others, which they can withhold at will. The Bank of England is withholding another country’s money for political purposes, regardless of how justified it is.
Tyler Winklevoss recently emphasized the case as an example of why the world ultimately needs Bitcoin (BTC). ‘This may cause some governments to rethink their gold strategy,’ he writes.
The current coronavirus pandemic has forced some commentators to consider the limits of gold. For example, in April, BeInCrypto reported that London and New York City gold markets were ‘dislocated’ due to thin liquidity and poor supply chains.