Deutsche Bundesbank, Germany’s central bank, is set to bring back home some $36 billion worth of gold stored in the United States and France.
The Bundesbank said in a statement Wednesday that it will repatriate all 374 tons of gold it had stored in Paris by 2020. An additional 300 tons — equivalent to 8 percent of the Bundesbank’s total reserves worth about $183 billion — will also be shipped from New York to Frankfurt.
The gold’s presence in the U.S. and France was part of a Cold War-era plan to protect Germany’s national treasure. Under the Bretton Woods agreement that Germany entered into in 1952, Reuters reports that the country was able to turn dollar claims into gold. At that time, in the post-war era, economic expansion came readily to Germany, as the nation’s exports to the U.S. were rapidly growing.
But with tides changing, the current sociopolitical landscape apparently no longer calls for Germany to continue housing so much of its gold abroad. Reuters provides more:
As the Cold War set in, Germany kept its gold reserves put, keeping them out of reach of the Soviet empire. But government officials have grown uneasy about the storage set-up and have called for the Bundesbank to inspect the bars.
The Bundesbank now wants to change the arrangement too, even though it has said it does not see a need to count the bars or check their gold content itself and considers written assurances from the other central banks as sufficient.
With the end of the Cold War it was no longer necessary to keep Germany’s gold reserves “as far to the west and as far from the Iron Curtain as possible”, Bundesbank board member Carl-Ludwig Thiele told reporters on Wednesday.
While the U.S. and London will maintain some of Germany’s gold, France, as stated, will not. With the introduction of the euro, Germany no longer needs to hold reserves at the Banque de France for exchange purposes.
These moves follow criticism from Germany’s independent Federal Auditors’ Office last year bemoaning the central bank’s oversight of gold reserves abroad. In October, the German Federal Court of Auditors, a body that oversees the country’s financial management, pushed for an official inspection of the gold being stored at foreign central banks. The motivation for this, of course, was the fact that such an inspection had never been undertaken.
Bundesbank, which also has more space to store gold in its vaults following the switch from the deutschmark to the euro, was tight-lipped regarding how it plans to transport the gold and how much the process will cost.
Frankfurt will hold half of Germany’s 3,400 tons of gold by 2020, with New York retaining 37 percent and London storing 13 percent. Bundesbank has been on a path toward moving some of its gold out of foreign nations for quite some time now. As Reuters notes, in 2000, Germany’s central bank transferred 931 tonnes from the Bank of England to Germany.
The Associated Press contributed to this report.