Spiegel
Online

A large
portion of Germany’s massive gold reserves are stored abroad, mainly
in the Federal Reserve in New York. But are the bars really where
they are supposed to be? A dispute has broken out over whether the
central bank needs to check on its gold, or if Germany can trust
its international partners.

Germany has
gold reserves of just under 3,400 tons, the second-largest reserves
in the world after the United States. Much of that is in the safekeeping
of central banks outside Germany, especially in the US Federal Reserve
in New York. One would think that with such a valuable stash, worth
around €133 billion ($170 billion), the German government would
want to keep a close eye on its whereabouts. But now a bizarre dispute
has broken out between different German institutions over how closely
the reserves should be checked.

Germany’s federal
audit office, the Bundesrechnungshof, which monitors the German
government’s financial management, is unhappy with how Germany’s
central bank, the Bundesbank, keeps tabs on its gold. According
to media reports, the auditors are dissatisfied with the fact that
gold reserves in Frankfurt are more closely monitored than those
held abroad.

In Germany,
spot checks are carried out to make sure that the gold bars are
in the right place. But for the German gold that is stored on the
Bundesbank’s behalf by the US Federal Reserve in New York, the Bank
of England in London and the Banque de France in France, the German
central bank relies on the assurances of its foreign counterparts
that the gold is where it should be. The three foreign central banks
give the Bundesbank annual statements confirming the size of the
reserves, but the Germans do not usually carry out physical inspections
of the bars.

‘No Doubts’

According to
German media reports, the Bundesrechnungshof has now recommended
in its confidential annual audit of the Bundesbank for 2011 that
Germany’s central bank check its foreign gold reserves with yearly
spot checks.

The Bundesbank
has rejected the demand, arguing that central banks do not usually
check each others’ reserves. “The scope of the checks that
the Bundesrechnungshof wants does not correspond to the usual practices
among central banks,” the Bundesbank said in a statement quoted
by the Frankfurter Allgemeine Zeitung newspaper. “There
are no doubts about the integrity and the reputation of these foreign
depositories.”

Now the finance
committee of the German parliament, the Bundestag, has gotten involved.
Parliamentarians apparently demanded to see the Bundesrechnungshof’s
audit report on the Bundesbank after they were alarmed by a report
in the influential tabloid daily Bild, which claimed that
the central bank had not checked its gold reserves in five years.
The Bundesrechnungshof will now provide the committee with its report,
a spokesman for the federal auditors confirmed on Monday.

Germany moved
some of its gold reserves abroad during the Cold War to protect
them from a possible Soviet attack. Some of the gold was moved back
to Frankfurt after the collapse of communism. But the Bundesbank
argues that it still makes sense to store some gold in major financial
centers so that it can be sold quickly if necessary. Although the
Bundesbank does not provide exact details about the distribution,
it has revealed that the largest share of Germany’s gold is held
in New York, followed by Frankfurt, London and Paris.

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October
27, 2012

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© 2012 Spiegel Online