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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (11144)	5/3/1998 3:50:00 PM
From: paul ross	Respond to of 116954

George- Frank Veneroso has mentioned this before in one of his conference calls. kitcomm.com (In answer to a question about % of gold in ECB reserves) Frank Veneroso: It is very, very important to realize that only about 15% of the reserves of the European central banks will be transferred to the ECB. You're really going to be looking at a system of central banks very much like the Federal Reserve System where you have a lot of district banks. And then you have the Fed Board of Governors in Wash. Well, the ECB will sort of be like the Fed Board of Govs. But there'll be a difference. And that difference is that there will be reserves. As a matter of fact most of the reserves will be held at the district bank equivalents at the countries' central banks. So it's perfectly possible that no gold could be put into the ECB. But that the remaining gold- all of the gold will then remain with the country central banks. But all of that gold will be retained by the ECB who will manage all of the reserves of the entire system. There's less significance than people suggest to the gold share of ECB assets. The ECB will probably be the front line of defense against currency runs, drains, attacks, and so forth. Therefore it should have the most liquid assets. Why do countries hold reserves? In part they hold them for these kinds of payments, disequilibria, these kind of reserve flows. But they also hold them as some kind of long run asset of last resort. And so it makes a lot of sense for a country to want to hold an asset that no one can default on, that can never be depreciated and that can survive under extreme conditions of war and so forth and so on. And you know the Europeans had plenty of this kind of trauma on their soil in this century. And some of the older members of the central banks and the govts. remember that. Kohl certainly remembers it very much because his whole motivation to push EMU into existence is to avert another Europ. war, to generate enough economic integration that a Europ. war will not be possible again. And you know if that's your sort of mindset, then the Germans might well want to hold gold as a less liquid asset as a reserve even though the ECB itself, the monetary authority, might want to hold more liquid assets for - you know - to meet currency draws.<<<<<<<<<<<<<<<<< This excerpt is from near the end of the article, in a question from Neil Stewart. Veneroso also discusses his feelings on further Europ. CB gold sales. PR