London: 24 February 1998
French Bank Governor Supports Gold in ECB
Gold has role as reserve asset for new European central bank. - One
of the leading contenders to be the first governor of the new European
Central Bank is firmly committed to a role for gold in the Bank's reserves.
Mr. Jean-Claude Trichet, the present governor of the Banque de France
and French nominee for the post of ECB governor, says that he believes
the ECB should include gold in its reserves.
In a wide-ranging interview with editor Robert Pringle, which is published
today in the magazine Central Banking*, Mr. Trichet reviewed many
of the fiscal and monetary issues involved in establishing a European
single currency, including reserve asset policy. On the question of including
gold in the ECB's reserves, he said: "there are three main reasons
why we consider it is desirable to include gold in the ECB's reserves:
Firstly, gold plays a de facto role in the international monetary system.
It is one of the elements on which confidence in the currency is based,
particularly in the eyes of public opinion. It is often viewed as the
ultimate reference asset.
"Secondly, putting no gold in the ECB reserves could be seen as
a challenge vis ‡ vis almost all central banks who hold gold in their
reserves.
"Thirdly, including gold in the ECB's reserves would be a way of
diversification of portfolios, which is a good tool to reduce the global
risk. So gold has a role to play."
Mr. Trichet also emphasised the commitment of the Banque de France to
retain its gold reserves, regardless of the ECB position.
"We have no intention of selling any gold, or in any way downplaying
the role of gold as a reserve asset. Gold is a very important element
in the credibility of the currency in the eyes of our people. If we had
gone in for gold sales, we would have lost credibility in the view of
public opinion. The same applies, I think, to other large gold holders.
The market needs to understand that none of these countries is going to
embark on a policy of a totally new nature", says Mr.Trichet.
Mr. Robert Pringle, who is also head of the Public Policy Centre of the
World Gold Council, said today: "We welcome Mr. Trichet's comments
as unequivocal support for a continuing role for gold as a reserve asset
in the new European Central Bank.
"Other national central banks in Europe, notably Italy and Germany,
are reported to be equally committed to gold and are expected to hold
on to their gold which is not passed to the ECB to form part of its reserves.
"All of this points to a continuing future role for gold in Europe
as a monetary instrument and reserve asset," said Mr. Pringle.
External link:
http://www.centralbanking.co.uk/ |