* Kept some reserves abroard for security in Cold War
* Plans to hold 50 pct of gold reserves in Frankfurt by 2020
* To transfer 300 tonnes from New York, 374 tonnes from
* Holdings at Banque de France no longer needed due to euro
By Eva Kuehnen
FRANKFURT, Jan 16 Germany's Bundesbank plans to
bring home some of its gold reserves stored in the United
States' and French central banks, bowing to government pressure
to unwind a Cold War-era ploy that secured the national
Germany amassed gold reserves in the post-war era thanks to
rapid economic expansion that saw growing exports to the United
States, where its dollar claims were turned into gold under the
Bretton Woods agreement that Germany joined in 1952.
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.
The German Federal Court of Auditors, which oversees the
government's financial management, called last October for an
official inspection of the gold reserves stored at foreign
central banks, because they have never been fully checked.
"To hold gold as a central bank creates confidence,"
Thiele said. "If I hold gold in my own vaults, I have to check
it myself," he said, adding that "a complete shift is not
Beginning this year, the Bundesbank plans to transfer 300
tonnes of gold from the Federal Reserve in New York and all of
its gold stored at the Banque de France in Paris, 374 tonnes, to
By 2020, it wants to hold half of the nearly 3,400 tonnes of
gold valued at almost 138 billion euros - only the United States
holds more - in Frankfurt, where it stores about a third of its
reserves. The rest is kept at the Federal Reserve, the Banque de
France and the Bank of England.
The Bundesbank gained more space in its vaults after the
transition to the euro from the deutschmark.
It did not want to disclose how much the gold transfers
would cost and how the gold would be transported.
Before German reunification in 1990, 98 percent of Germany's
gold was stored abroad. The Bundesbank then started to bring its
gold home and in 2000 transferred 931 tonnes from the Bank of
England to Germany. It will continue to hold about 13 percent of
its gold reserves in London, even after 2020.
With the introduction of the euro, the Bundesbank sees no
need to hold any reserves at the Banque de France as it will no
longer need them for exchange for foreign currency.
"This is above all a historical anomaly which is now being
corrected," said David Marsh, chairman of think tank OMFIF,
which issued a report earlier this month in which it foresaw
growing importance for gold due to uncertainty stemming from the
rise of China's renminbi as an alternative to the dollar.