Draft law to bring international gold reserves back to Romania passes in the Senate

Anca Alexe 02/04/2019 | 08:15

Romanian senators adopted a draft law introduced by PSD leader Liviu Dragnea and senator Serban Nicolae to force Romania’s National Bank (BNR) to bring almost all of Romania’s gold back from reserves being held at the Bank of England in London, according to profit.ro.

The supporters of this project say that the BNR should no longer pay the fees to hold the gold abroad, considering that Romania has reached the status of a functional economy.

The project will now be sent to the Chamber of Deputies for debate. The Legislative Council says that such a change of the BNR statute needs endorsement from the Central European Bank.

“Of the reserve, the BNR can store gold abroad only with the purpose of obtaining revenue. Gold held by the BNR abroad cannot exceed 5 percent of the total amount of gold reserve,” the project reads. The current estimate is that 65 percent of Romania’s gold is being held abroad.

Opponents have said that bringing back the gold would endanger the government’s ability to borrow from external markets, especially in the case of a new recession. Furthermore, they say that returning the gold to the country would be a very costly process.

Romania’s gold reserve totals 103.7 tonnes and was worth EUR 3.84 billion at the end of last year.

In recent years, several countries have decided to repatriate their gold reserves. In 2014, The Netherlands brought back over 122 tonnes of the gold it had in New York, but still keeps 69 percent of its gold outside the country, in New York, Ottawa and London.

Germany returned over 530 tonnes of its international reserves in New York and Paris between 2013 and 2016, meaning a little over a third of its total reserves. By 2020, the German central bank intends to have 37 percent of the reserve in New York and 13 percent in London, while the other half should be in Frankfurt.

Hungary’s central bank announced last spring that it would bring back the three tonnes of gold it held in London, meaning its entire reserve at the time. In the meantime, Hungary started buying gold and increased its holdings tenfold until the fall of 2018, to 31.5 tonnes.

In 2012, Venezuela brought back 160 tonnes of gold of the reserves it had in the US and Europe. It tried to transfer another 14 tonnes from London last year, but the Bank of England rejected the transfer at the request of the United States.

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