There is a tendency for people and, in some cases, institutions, to hoard monetary gold, usually as a security against socio-economic crises. The process of hoarding in effect reduces the funds circulating within the economy which would otherwise be used to finance new developments.
Although it is not possible to be certain of the amount of hoarded gold, it has been estimated, for example, that in some developing countries in Southern Asia and the Middle East the hoarded gold may represent 10% of the national income. Some hoarding is done by governments where the law requires that the local currency should be backed to 100% by foreign exchange.