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ECB gives cautious green light to League's bill on Bank of Italy gold reserves

ROME (Reuters) - The European Central Bank on Tuesday gave a substantial green light to a bill by Italy’s ruling League party which seeks to spell out that gold reserves held by the Bank of Italy belong to the state, and not the bank itself.

The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach

The bill, tabled in February by the League’s economics chief Claudio Borghi, was strongly criticized by the opposition who said its aim was to allow the ruling coalition to potentially sell the gold to fix Italy’s public finance problems.

Borghi denied this, saying he wanted to clarify the legal ownership of the gold, establish a question of principle and bring Italy’s situation in line with those of other EU states.

In an official opinion published on the ECB’s website, the bank said EU treaties do not use the concept of ownership with regard to official gold reserves, but only deal with the question of their “exclusive holding and management”.

The opinion, signed by President Mario Draghi, asked the government to consult with the Bank of Italy if it planned to push ahead with the legislation, in order that the central bank’s independence be “fully respected”.

One change it requested to the bill was the removal of a reference to the Bank of Italy holding the gold in terms of “an exclusive title of deposit”.

It said this “could be read as limiting (or even excluding) the Bank of Italy’s power to independently take decisions related to holding and managing the official reserves that are necessary to accomplish its tasks under the Treaties”.

The ECB’s opinion also spelled out that the treaties require that the gold reserves must not be transferred from the balance sheet of the Bank of Italy to that of the state.

Borghi told Reuters the ECB’s opinion was a “victory” and said he would “think about changing” the wording on the “exclusive title of deposit” as the bank requested. He added that this did not change the substance of his bill.

Relations have often been tense between the Bank of Italy and the coalition of the right-wing League and the anti-establishment 5-Star Movement which took office a year ago.

The coalition has accused the central bank of poor supervision which it says caused a spate of bank collapses in recent years in which thousands of Italians lost their savings.

The government this month tabled another bill aimed at giving the government and parliament the right to name the central bank’s five-member board, ending the current system by which appointments are made mainly internally.

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Editing by Catherine Evans