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Bundesbank to repatriate French, US gold by 2020

FRANKFURT — The German central bank or Bundesbank said on Wednesday it will relocate parts of its gold stored abroad following recent accusations that it was not keeping proper track of the vast reserves.

“The Bundesbank is planning a phased relocation of 300 tonnes of gold from New York to Frankfurt as well as an additional 374 tonnes from Paris to Frankfurt by 2020,” the central bank said in statement.

“By 2020, the Bundesbank intends to store half of Germany’s gold reserves in its own vaults in Germany,” the statement continued.

“The other half will remain in storage at its partner central banks in New York and London.”

On December 31, 2011, Germany had 3,396 tonnes of gold valued at about 132.9 billion euros ($176.4 billion), 31 percent of which is held in the Bundesbank’s own vaults, with 45 percent deposited at the US Federal Reserve, 13 percent at the Bank of England and 11 percent at the Bank of France.

By 2020, 50 percent would be held in Frankfurt, 37 percent in New York, 13 percent in London with no gold left in Paris, the Bundesbank said.

The new storage plan would enable the central bank to “focus on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centres abroad within a short space of time,” it explained.

The withdrawal of the reserves from the storage location in Paris “reflects the change in the framework conditions since the introduction of the euro,” the statement said.

Given that both France and Germany shared the euro as their national currency, the Bundesbank was “no longer dependent on Paris as a financial centre in which to exchange gold for an international reserve currency should the need arise.”

“As capacity has now become available in the Bundesbank’s own vaults in Germany, the gold stocks can now be relocated from Paris to Frankfurt.”

The move comes after the Bundesbank locked horns with the federal court of auditors or Bundesrechnungshof last October over criticisms the German central bank is not keeping proper track of its vast reserves of gold.

At the time, the Bundesrechnungshof, which audits Germany’s finances, complained in a confidential letter to a parliamentary committee that the Bundesbank had never made sure that large parts of its gold reserves held by foreign central banks were subject to regular on-the-spot checks.

“In view of the high value of the gold reserves stored with foreign central banks and the fact that these have never been registered, the court of auditors views it as essential for regular physical checks and assays to be carried out at the foreign central banks,” the letter stated.

The Bundesbank issued a sharply worded response, retorting that it was “not usual practice between central banks” to carry out checks to verify its gold reserves were all present and correct.

“There is no doubt about the integrity, reputation and security” of the foreign central banks’ depositary facilities and the Bundesbank received certified confirmation of its inventory down to the nearest troy ounce every year from the central banks concerned, it said.

“There is no doubt whatsoever that the depositaries enjoy the best possible reputation and creditworthiness,” the Bundesbank insisted.