harry potter - What Do the Gringotts Goblins Do With Muggle Money?

‘But you’re Muggles!’ said Mr Weasley delightedly. ‘We must have a drink! What’s that you’ve got there? Oh, you’re changing Muggle money. Molly, look!’ He pointed excitedly at the ten-pound notes in Mr Granger’s hand.
Chamber of Secrets - page 47 - UK Hardcover - chapter 4, Flourish and Blotts

So Gringotts exchanges Muggle money for Wizarding money. What do the Goblins do with the Muggle money after the exchange has been made? Is it possible they keep a stash of Muggle money on hand for reverse exchange purposes, or do they surreptitiously feed the money back into the Muggle economy?

What do Goblins do with Muggle money?

Answer

UPDATE:

Found a canon answer:

Q: When people trade in Muggle money for Wizard money, what does Gringotts do with the Muggle money?

JKR: Those goblins are sneaky people. They manage to put the Muggle money back into circulation. They are like "fences" --British slang, do you understand it?

(src: America Online chat with JKR transcript, AOL.com, 19 October 2000)

================

Original answer:

No canon info I could find, but:

They can reverse-exchange it to those dealing in Muggle world (as per Dharini's excellent comment)

They can purchase - through intermediaries - resources in Muggle world. Minerals, chemicals, may be land. Remember that Goblins can't have wands and therefore may not be as resource-independent as Wizards (and even they aren't very resource independent).

They could also simply stockpile it as a hedge. In case magical world ever connects with Muggle, they will be well off :)

Also, there aren't THAT many muggle-born Wizards, so it's unlikely we are talking about a LOT of money being exchanged here. Aside from Muggle parents of Magical kids, or the extremely rare wizard working in Muggle world (see separate question on SFF), who'd need to exchange money?

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