1. As maintained in the past, and despite recurrent market rumours
to the contrary, informed sources continue to believe that there will
be no new significant gold operations by national central banks (NCBs)
of member countries before the beginning of EMU. Thereafter, any disposal
programme will be closely coordinated by the European Central Bank (ECB).
2. For some time after EMU starts in January 1999, all reserve asset
operations (including those for gold) above a fairly low level will
be subject to prior approval by the ECB in Frankfurt. Indeed, we understand
that this minimum level may be set at less than 10 million euros, or
about 1 tonne of gold.
3. Gold holdings by member NCBs are not expected to be subject to benchmark
yields by the ECB. Thus it should not be necesssary for countries such
as France or Italy to enter the gold lending/swap markets in order to
meet Frankfurt targets on their gold reserve asset holdings.
4. There is continuing discussion on how gold transferred from NCBs
to the ECB will be valued but it will probably be priced at prevailing
market prices with a small discount. At least part of the reason for
this is to prevent some member NCBs, who value their gold holdings at
or close to prevailing market prices, from having to declare a loss
on holdings.
Many of the key decisions relating to gold have yet to be made. These
difficult issues include the valuation method, whether all central banks
will contribute the same proportions of dollars, yen and gold and whether
the 15% gold to reserves ratio would be maintained in the event that the
ECB called up more reserve assets.