SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Gold/Mining/Energy : Gold Price Monitor
GDXJ 105.33+5.2%Nov 26 4:00 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Enigma who wrote (60426)11/2/2000 9:25:30 AM
From: Alex  Read Replies (3) of 116770
 
ECB to Dump Dollars???????????

Most of the foreign exchange reserves potentially backing up the euro are owned by the 11 national central banks. The ECB itself has only about E50bn of reserves directly at its disposal. The remainder, worth more than E210bn, plus most of the gold, belongs to the national central banks. These reserves were accumulated during the pre-euro period when there were still 11 national currencies that needed some foreign exchange reserve backing. With the launch of the euro, however, there is no longer any reason for national central banks of the euro-zone to continue to keep more than E210bn of reserves. As these reserves consist mostly of dollars, which are currently over- valued in a long-term perspective, there is a strong argument for disposing of them to realise the profit. But this is not a job for the ECB. The simplest way to dispose of the excess reserves at the national central banks would thus be to ask them to keep E50bn and transfer the remainder of about E160bn to national treasuries. Keeping reserves of E50bn in the national central banks of the eurosystem is more than enough for a potential call-up by the ECB because this would allow the ECB to count on about E100bn in an emergency, about twice the sum available to US authorities.

National treasuries in the euro-zone countries would then find themselves with E160bn worth of dollars. If they believe what their political representatives repeatedly assert, that the euro is massively undervalued, they should sell these dollars quickly and use the proceeds to pay off public debt. The entire operation would thus be equivalent to a massive intervention.

news.ft.com
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News