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To: Alex who wrote (29670)	3/10/1999 6:37:00 PM
From: goldsnow	Respond to of 116764

INTERVIEW-No Swiss gold sales before mid-2000 - SNB 11:46 a.m. Mar 10, 1999 Eastern By Michael Shields ZURICH, March 10 (Reuters) - Switzerland is likely to have the legal framework in place to start selling excess gold reserves only by mid-2000 at the earliest, a senior central bank official said, but the exact timing of sales is still open. Swiss officials have proposed selling up to 1,300 tonnes of gold now on the books of the Swiss National Bank. But the transactions are linked to two separate referendums and need parliament to approve specific legislation on gold sales. Adopting a new law to allow gold sales is technically possible if voters approve an overall revision of the Swiss constitution in a referendum on April 18, Swiss National Bank Director Peter Klauser said in an interview this week. But the Swiss government may wait with the key legislation authorising such sales until after another referendum on reforming just the currency section of the constitution, which is tentatively set for March 2000. Either process will take time. ''In my view, markets should not think that Switzerland will be legally prepared for gold sales until the middle of next year, if not later,'' Klauser told Reuters. Both next month's referendum and the one set for 2000 can cut the Swiss franc's link to gold, so laying the constitutional groundwork for plans to gradually sell off half the SNB's gold reserves. Enabling legislation for gold sales could theoretically be based on the referendum next month on the overall revision of the constitution, Klauser said. Both houses of parliament have already approved the new constitution. The separate ''reform'' amendment of the currency section has been passed by the lower house and is due for an upper house vote on March 17. If adopted as expected, it faces a mandatory referendum, probably in March 2000. In either event, parliament still has to approve specific legislation authorising gold sales, and this could take some time, Klauser said. ''This federal law must be forwarded to parliament in a proposal from the government and this will not happen before this summer,'' he said. ''This federal law on currency and payment instruments must be adopted by both houses of parliament. Only after this law is adopted and a 90-day period for a referendum to be organised expires could one think about selling gold. In concrete terms, this will not be before March 2000 or so.'' Klauser said the government may not give parliament any bill governing gold sales until after Swiss voters address the specific currency article in the referendum next year. He said postponing any gold sales until the separate, specific article is addressed by the people might be better from a psychological standpoint. Under the first variant -- the overall revision of the constitution -- the SNB could sell gold under the federal law, invest the money in interest-bearing assets and distribute profits under the constitutional formula of two-thirds to the cantons and one-third to the federal government, Klauser said. ''But in this case it would be obligatory for the Swiss National Bank to keep all the assets on its books, even those considered no longer needed to conduct monetary policy,'' he said. ''This is conceivable. But psychologically it might be better to sell gold when one sees what the proceeds would be used for. Both variants are basically possible.'' The reform version of the currency article differs from the overall revision of the constitution in that it expressly addresses reserves no longer needed for monetary policy. Only the reform version of the specific amendment -- backed by the federal law -- authorises the SNB to transfer part of its gold or proceeds from gold sales to the federal government. The finance ministry said last week the reform version is the only way that gives constitutional backing to gold sales and that the April 18 vote alone would not suffice for this. But Klauser offered a broader range of options. ''Strictly speaking, the overall revision would allow enabling legislation that could form the basis for gold sales. But it is just as possible to hold off on the enabling legislation and do this only when the reform version is adopted by the people,'' Klauser said. ''It spells out that -- provided special federal legislation to this effect is enacted -- excess gold can be sold and the proceeds can be used for public purposes, for example to help finance the Solidarity Foundation,'' Klauser said. The Berne government has proposed setting up the Foundation, a humanitarian fund, with proceeds of 500 tonnes of gold sales. The other 800 tonnes are earmarked for general budget purposes. Klauser said he thought gold sales were not controversial in Switzerland and that the parliament had been wise to separate the idea of sales from concrete plans on how to spend proceeds. ''The public is already widely aware that part of the SNB's stock of gold will be sold. The fact that the SNB will separate itself from part of its gold reserves is widely accepted by politicians and the Swiss public,'' he said. ((Zurich newsroom +41 1 631 7340 fax +41 1 202 5538, zurich.newsroom+reuters.com)) Copyright 1999 Reuters Limited.