Where does the gold bullion comes in final accounts of banking services
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Answer:
Bullion banking encompasses all services which are denominated by precious metal, including the lending, investment and servicing of precious metal assets and precious metal derivatives.
As with fiat currency banking, bullion banking is typically based on a fractional reserve system. In this system, book money (like precious metal account balances or gold certificates) is generated by private banks based on a much smaller amount of base money (physical bullion, in this case). Book money is generated by the issuing of non-allocated gold certificates, the provision of loans denominated by precious metals, and the creation of precious metal account balances.
Bullion banking is widely used in investment banking. Banks which engage in bullion banking are known as bullion banks. Bullion banks typically participate in the London Bullion Market Association (LBMA) and carry out banking based on LBMA good delivery bullion. Bullion banks may act as market makers for precious metals markets.
Swiss banks which engage in bullion banking include UBS, Credit Suisse, Bank Julius Baer and the Zürcher Kantonalbank and Pictet & Cie, all of which participate in the LBMA.
On a smaller scale, activities which may qualify as bullion banking include the purchase and sale of physical precious metal bullion, the brokerage of precious metal investments, the secure storage of bullion, the selling of gold certificates and the provision and servicing of precious metal accounts.
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