Central banks are the predominant source of leased gold. According to GFMS, by the end of 2001 over 80 of them were providing through their deposits and swaps more than 4,650 tonnes (150 million oz) to the market, earning a return on an otherwise sterile asset. By comparison, under 500 tonnes (16 million oz) of leased gold is available from non-official sources. Central banks, in short, provide the market's liquidity.

Moreover, the mobilizing of their gold for leasing has brought many central banks back into the market for the first time in three decades, and given them an insight into what else it can offer in terms of writing options on their reserves or outright sales. Central banks have got a taste for earning a return on gold through their leasing, making them eager to see how else they can profit.

Central bank gold has provided liquidity for many gold market operations, whether gold loans or forward and option books by mining companies, masking gold sales by central banks until the moment of delivery, underwriting speculators' short positions, underpinning bullion dealers' consignment stocks, or simply providing jewellery manufacturers with working metal. However, producer hedging has provided up to two-thirds of the liquidity requirements much of the time, except when a large central bank sale was underway calling for borrowed metal to conceal sales in published gold stocks until it was all over.

Initially, leasing often came from central banks in developing countries, eager for some return on gold but, increasingly, major European central banks, including the Austrian, Belgian, Netherlands, German and UK central banks, came to participate. Even the Swiss National Bank joined in. GFMS estimate that between 1995 and 1999 over 60% of new leasing came from European central banks.

Thus the Washington Agreement of September 1999 in which 15 European central banks announced, among other things, that they would not increase their leasing, had an immense impact on the gold lease rate, which momentarily went to 10% instead of the more normal ½% – 1½%. Clear evidence of how the gold market has come to live on leased central bank gold. Although less than 15% of all world official gold holdings are currently leased, the Washington Agreement, combined with the reluctance of other large holders such as the United States to enter the leasing market has put a question mark against the assumption that liquidity from the central banks will always be readily available to the market. On the other hand, many central banks have shown a reluctance to close out swaps and reduce their existing deposits. This has been the case in spite of a slump in the level of gold leasing rates, itself mainly caused by a reduction in outstanding producer hedge positions in 2001, which has continued in the first half of 2002.