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EU Gold Reserves - Politics, Repatriation, and Central Banks

In the recent bullion repatriation trend, various countries including Germany, Hungary, Austria and the Netherlands have all repatriated thousands of tons of their gold back home. This is due to both new financial policies and public pressure to hold their bullion reserves on their own soil.

Gold’s has unique, anti-inflationary features, making the yellow metal financially relevant to any country’s balance sheet. This is why major economies like Russia and China are now also buying and accumulating more gold than ever.

Recently both Romania and Italy have hit the news for trying to repatriate their gold. There is a lot of political and economic debate going on in these two countries regarding gold repatriation.

Romania’s Gold Repatriation Bill:

Out of the total 103.7 tons of gold that Romania currently owns, about 60% is stored remotely in the Bank of England vaults located in London. With the increasing trend of gold repatriation all over the world, the Romanian public and its ruling party (PSD) are stressing the need to repatriate Romania’s gold back home.

Two representatives of the Social Democratic Party of Romania, which currently has a majority in the parliament (Senate and Chamber of Deputies), have submitted a legislative bill to make the gold repatriation process seamless. This bill mandates that only 5% or less of Romania’s total gold reserves can be stored abroad.

This bill is named the “The Dragnea and Nicolae gold repatriation bill”, and has already been debated and passed by Romania’s Senate. Now it has to pass the Chamber of Deputies' voting process. It seems likely that the bill will also be passed here too.

National Bank Of Romania and The Opposition:

Like most national and central banks, Romania’s National Bank also seems opposed to repatriating gold from England. The head of the NBR has clearly stated that the bill interferes with the “Independence” of the NBR. The governing board of the bank has publicly condemned the bill.

Former Romanian president Traian Basescu has also stated that the bill is a big mistake. His concern is that if the gold is stored in Romania then it is more difficult to use in a state of emergency. He also talked about the overall repatriation costs and tried to convince the public against this bill.

An advisory body to the Romanian parliament, The Romanian Advisory Council has suggested that the NBR should consult the European Central Bank before taking any measures. But the head of the Social Democratic Party has said that Romania is a sovereign state and doesn’t need ECB advise for its legislation.

The Italian Gold Dilemma, Who Really Owns It?

Meanwhile, in Italy there is a conflict between the nation’s central bank and its parliament over who actually owns Italy’s vast gold reserves. Keep in mind that Italy has the world’s fourth-largest gold reserves, at 2451.8 tons. The main disputed point is who owns Italy’s gold. Is it the country’s National Bank, or its state and the citizens of Italy.

Another consideration is that about half of Italy’s gold (1200 tons) is currently being held in remote locations including New York, London, and Switzerland. Costs of repatriation could be significant for the country.

Banca d`Italia’s Opinion:

The National Bank of Italy claims that it legally owns all of the gold reserves stored in it as well as all of the country’s remotely held gold.

On the contrary, Italy’s parliament and politicians are passing new bills to make the parliament and the people of Italy the sole owners of this Gold.

With over 2400 tons of gold, the stakes couldn’t be any higher. But the situation is moving steadily forward with the Italian parliament and people more likely to win.