4:04 PM
Germany -- For the great many Germans who still rue the day they had to trade their deutsche marks for euros, there has been at least one consolation. If the common currency did not work out, Germany still had huge reserves of the hardest currency of all - - gold.
Except, many people learned for the first time last year, it didn't. More than two-thirds of Germany's gold reserves, valued at 137 billion euros ($182 billion) are abroad, stored in vaults in Paris, London and, above all, New York. In fact, there is considerably more German gold in Manhattan than in Frankfurt.
On Wednesday, the German central bank said it would begin gradually repatriating some of the reserves, the second-largest stock in the world after that of the United States. The Bundesbank was responding to a public outcry last year after a clash in Parliament about whether all the gold was properly accounted for.
The goal is to house more than 50 percent of German gold in Bundesbank vaults in Frankfurt by 2020, up from a little less than a third today, the bank said. About 45 percent of the reserves are 80 feet below street level in a Federal Reserve Bank of New York vault.
The move will include the complete withdrawal of German gold stored at the Banque de France in Paris, about 11 percent of the total. Bundesbank officials were anxious to note that the decision was not a reflection of French trustworthiness. Rather, it is because France and Germany now share the euro, so there is no need for reserves as insurance against currency crises.
"The gold in Paris is in the best of hands," Carl-Ludwig Thiele, a Bundesbank executive board member, said Wednesday. "We are thankful to the Bank of France for storing it."
Still, news of the planned transfer caused some tongue-clucking in financial circles after news leaked out Tuesday.
"Central banks don't trust each other?" William H. Gross, a founder and managing director of the investment firm PIMCO, asked on Twitter.
Except, many people learned for the first time last year, it didn't. More than two-thirds of Germany's gold reserves, valued at 137 billion euros ($182 billion) are abroad, stored in vaults in Paris, London and, above all, New York. In fact, there is considerably more German gold in Manhattan than in Frankfurt.
On Wednesday, the German central bank said it would begin gradually repatriating some of the reserves, the second-largest stock in the world after that of the United States. The Bundesbank was responding to a public outcry last year after a clash in Parliament about whether all the gold was properly accounted for.
The goal is to house more than 50 percent of German gold in Bundesbank vaults in Frankfurt by 2020, up from a little less than a third today, the bank said. About 45 percent of the reserves are 80 feet below street level in a Federal Reserve Bank of New York vault.
The move will include the complete withdrawal of German gold stored at the Banque de France in Paris, about 11 percent of the total. Bundesbank officials were anxious to note that the decision was not a reflection of French trustworthiness. Rather, it is because France and Germany now share the euro, so there is no need for reserves as insurance against currency crises.
"The gold in Paris is in the best of hands," Carl-Ludwig Thiele, a Bundesbank executive board member, said Wednesday. "We are thankful to the Bank of France for storing it."
Still, news of the planned transfer caused some tongue-clucking in financial circles after news leaked out Tuesday.
"Central banks don't trust each other?" William H. Gross, a founder and managing director of the investment firm PIMCO, asked on Twitter.
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