# Nagel Says Geopolitics Is Reshaping ECB Policy and Gold Reserves

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/regulation/27897
Published: 2026-10-08T09:37:03.000Z
Updated: 2026-10-08T09:37:03.000Z
Section: Regulation

> The Bundesbank president cited energy and shipping risks to the euro-area outlook and said physical gold can diversify central-bank reserves.

Deutsche Bundesbank President Joachim Nagel said geopolitical conflict is reshaping euro-area growth, inflation risks, monetary policy and central-bank reserve management, with physical gold gaining importance as a diversification asset.

“Geopolitical rivalry and security concerns are increasingly shaping trade, investment and supply chains,” Nagel said in a keynote at the Global Precious Metals Conference in Sorrento, Italy.

The conflict in the Middle East, disruption to shipping through the Strait of Hormuz and higher energy prices have added uncertainty to the euro-area outlook. Growth prospects remain closely tied to trade, energy costs and business confidence.

Euro-area economic growth is projected at 0.9% in 2026 and around 1.5% in both 2027 and 2028. Inflation is projected to average 3% in 2026, 2.5% in 2027 and 2.1% in 2028.

The European Central Bank’s Governing Council raised its key interest rates by 25 basis points in June and September. The deposit facility rate stood at 2.5% after the September decision.

Nagel said monetary policy cannot prevent an initial energy shock because higher interest rates do not produce oil or gas, repair infrastructure or reopen trade routes. Central banks must respond if higher costs persist and spread into consumer prices and wage negotiations.

“This high uncertainty surrounding the inflation outlook calls for flexibility, not inaction,” Nagel said.

Nagel also described gold as a distinct reserve asset because physical gold does not depend on an issuer or counterparty meeting a payment obligation. Foreign-exchange assets remain better suited to exchange-rate intervention and liquidity provision, while gold can provide diversification as geopolitical fragmentation increases.

Gold accounted for almost 70% of global central-bank reserves at market value in 1950, when the United States held about 70% of official gold stocks. Its share later declined as foreign-exchange reserves expanded, falling from close to 60% in 1979.

Nagel described the shift in three phases: gold’s role as a monetary anchor under Bretton Woods, its retreat as global trade and foreign-exchange reserves expanded, and its return as a central-bank reserve asset.