- 13 January 1999
Euroland - the world’s largest gold holder
In the light of various speculative press reports concerning gold
and this week’s publication of the first financial statement by the
European Central Bank, the Centre for Public Policy Studies of the World
Gold Council is issuing this press release to clarify the key issues.
It is important to emphasise that the mere publication of this financial
statement carries no implication for future gold sales by either the ECB
or the 11 individual EU member states which comprise Euroland.
LONDON - 8 January 1999 - The "Eurosystem" is now - as a consequence
of the changes resulting from the introduction of the euro - the world’s
largest single holder of gold, easily exceeding the amount held by the
world’s previous largest holder, the US.
The Eurosystem consists of the European
Central Bank (ECB) in Frankfurt and the national central banks of the
11 countries (see note) that have joined the European Economic
and Monetary Union (EMU), under the terms of the 1992 Maastricht treaty.
On 5 January the ECB published an initial
balance sheet for the Eurosystem, which will be updated weekly. It showed
the system’s total gold holdings to be worth euro99.6bn. The gold
valuation used by the ECB was set at euro246.368 per troy oz, equivalent
to the London am fix on the morning of 31 December ($287.45). This valuation
will be updated quarterly according to gold’s market value on the
last day of the preceding quarter. Euro99.6bn of gold was therefore equivalent
to 404.3m oz or 12,574 tonnes of gold. This is more than a third of all
the gold held by central banks and international monetary institutions
(around 34,000 tonnes).
The same balance sheet showed Euroland’s
other foreign reserves (ie foreign currencies) totalling euros227.4bn.
Gold therefore makes up some 30.5 per cent of Euroland’s total foreign
reserves, a much smaller proportion than in the US which currently holds
around 53 per cent of its reserves as gold.
The creation of the euro involved various
changes in the gold holdings of EU central banks, as follows:
- Previously all EU central banks deposited 20 per cent of their gold
and foreign exchange holdings with the European Monetary Institute (EMI
- the ECB’s forerunner) in exchange for ecu. These deposits were
returned at the end of 1998.
- The 11 Euroland central banks had together to transfer a total of
euro39.47bn of gold and foreign exchange reserves to the ECB. 15 per
cent of this - euro5.92bn - was in gold. This is equivalent to 747 tonnes
of gold at the price adopted by the ECB.
- The amount each central bank had to transfer to the ECB was determined
according to its ECB shareholding.
While the gold and foreign exchange reserves of the national central
banks will remain in their possession, it is important to emphasise that
- under the terms of the Maastricht treaty - all gold and foreign exchange
reserves are at the disposal of the ECB. According to the Maastricht treaty,
transactions above a certain limit will be subject to approval by the
ECB. Guidelines covering any gold and foreign exchange transactions carried
out by the former national central banks have been adopted but have not,
however, been published.
The largest individual gold holders within
Euroland - Germany, France and Italy - have all confirmed in the recent
past that they will not be looking to sell any of their gold reserves.
Note: Austria, Belgium, Finland, France,
Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain.
The four remaining members of the EU - Denmark, Greece, Sweden and the
UK - are not, for the time being, participating.
See also:
Top 20 Central Bank and Financial
Institutions' Gold Holdings
Contact: Gary Mead, Head of Research, Centre for Public Policy
Studies
World Gold Council, London.
E-mail: gary.mead@wgclon.gold.org
|