FRANKFURT (Reuters) - Germany’s Bundesbank took more than 200 tonnes of its gold back to Frankfurt from overseas last year, the central bank said on Wednesday, as it moves toward hoarding half of the world’s second-largest reserve at home.
In the wake of the euro zone crisis, many ordinary Germans want to see more of the 3,381 tonnes of gold in vaults at home and some have even questioned whether it still exists, prompting the Bundesbank to recently publish a long list of gold bars.
Just over 40 percent of the reserve, which Germany started building in the post-war boom years, is now held underground at the Bundesbank in Frankfurt, while almost the same amount is stored at the Federal Reserve in the United States.
Holding gold reserves abroad is a legacy of the Bretton Woods system of currency management established after World War Two. Much of the precious metal stayed there during the Cold War, when the former Soviet Union occupied eastern Germany.
As well as the reserves in the United States another 400 tonnes of German gold are held by the Bank of England. London and New York are centers for gold trading as well as home to two global currencies and - in an emergency - gold stored at those centers could be converted into sterling or dollars.
France, Germany’s closest political ally in the euro zone, keeps less than half the amount stored in London and will have none at all by 2020 when half of the overall reserve will be guarded in Germany’s financial center.
The impact of the global financial crisis has been mild in Germany compared with other European countries but many Germans are suspicious of the euro project after an economic crisis almost fractured the currency, used by 19 European countries.
In uncertain times, gold is considered a safe asset, even though its value has recently fallen.
Proof that it is still in safe hands is important for many Germans. The Bundesbank said all gold bars are “thoroughly and exhaustively inspected and verified” on arrival.
Germany’s gold holding, which is valued at roughly $130 billion, is the second biggest in the world, after the United States. The German reserve is roughly twice that of China, according to the World Gold Council, an industry body.
Reporting by John O’Donnell; Editing by Dominic Evans
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