Ger­many brings its gold stash home sooner than planned

The Malta Business Weekly - - FRONT PAGE -

Ger­many's cen­tral bank is bring­ing home gold re­serves stored in places like New York and Paris faster than planned, it said last week, as con­fi­dence in the euro ebbs even in the heart of the cur­rency bloc af­ter a decade of a slug­gish econ­omy.

Stashed away at the height of the Cold War in safe havens well out of Moscow's reach, the 3,378-tonne, 120 bil­lion-euro gold stock­pile has be­come a sym­bol of Ger­many's eco­nomic as­cent and a guardian of its sta­bil­ity.

But with Europe stum­bling from cri­sis to cri­sis, the Ger­man pub­lic has grown un­easy about keep­ing the gold abroad. Some even ar­gue the world's sec­ond big­gest bul­lion re­serve may be needed to back a new deutschmark, should the euro zone break up.

Hav­ing al­ready moved 583 tonnes of gold out of New York and Paris, the Bun­des­bank plans to have half its gold in Frank­furt by the end of 2017, years ahead of its 2020 sched­ule, with the rest split be­tween the Federal Re­serve Bank of New York and the Bank of Eng­land.

"We have a lot of dis­cus­sions about (US Pres­i­dent Don­ald) Trump, re­gard­ing im­pli­ca­tions on mon­e­tary pol­icy, macro­eco­nomics, etc., but we trust the cen­tral bank of the US," Bun­des­bank board mem­ber Carl-Lud­wig Thiele told a news con­fer­ence.

"Trump has not trig­gered a dis­cus­sion about the stor­age fa­cil­ity in New York," he said.

With French Pres­i­den­tial candi- date Marie Le Pen and Italy's 5Star Move­ment openly cam­paign­ing to pull their na­tions out of the euro, con­fi­dence in the com­mon cur­rency ap­pears to be wan­ing.

Op­po­nents ar­gue that the rigidi­ties of the cur­rency union force them from aus­ter­ity to aus­ter­ity, keep­ing unem­ploy­ment high, wages low and com­pet­i­tive­ness weak, per­pet­u­at­ing eco­nomic malaise that ac­tu­ally drives coun­tries apart and fail­ing the key goal of the euro.

Thrifty Ger­mans, work­ing to re­pay debt taken out at the height of the cri­sis, mean­while feel they are forced to bankroll many of Europe's weak­est economies, a source of an­i­mos­ity.

Still, the Bun­des­bank is con­tent to keep just half of the gold at home and has no plans to re­lo­cate even more of the re­serves, Thiele said.

Thiele added that Bri­tain's plans to leave the EU have had no ef­fect on the plans, since London re­mains a key gold-trad­ing mar­ket and a safe place for stor­age.

Moved in part via Switzer­land, the re­lo­ca­tion has so far cost €6.9 mil­lion, Thiele said.

Hop­ing to soothe the pub­lic and ease spec­u­la­tion that some of the gold might not even be there, the Bun­des­bank re­leased a 2,300-page list of gold bars in 2015, promis­ing in­creased trans­parency to calm wary Ger­mans.

Dur­ing the Cold War, 98 per­cent of Ger­many's gold was stored abroad, with the big­gest chunk moved so far, some 931 tonnes, brought back from the Bank of Eng­land in 2000.

Once the re­lo­ca­tion is com­pleted, the Bun­des­bank will keep 1,236 tonnes in New York, 432 tonnes in London and the rest in Frank­furt. The cur­rent move in­volves 300 tonnes from New York and 374 tonnes from Paris.

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