Romania Adopts Draft Law To Repatriate Its Gold; Central Bank Opposes Move
(Kitco News) - Romanian’s plan to repatriate its foreign gold reserves continues to move forward as the nation’s Senate adopted a draft law proposed in late February, according to media reports.
The draft legislation, which was voted on Monday, proposes bringing back 95% of the country’s gold, which is currently held in Bank of England vaults. The legislation was initially brought forward by Romania's Social Democrat Party (PSD) leader Liviu Dragnea and PSD senator Serban Nicolae.
The proponents of the legislation have said that because of Romania’s stable economy, there is no reason why the government should pay to hold its gold abroad.
According to the draft law: “The National Bank of Romania can deposit gold from the established reserve abroad exclusively for the purpose of obtaining income through trading and other specific operations. The gold deposited by the National Bank of Romania abroad cannot exceed 5% of the total gold reserve.”
However, the government could be in for a difficult fight as the central bank has come out against the proposed legislation.
According to reports, the central bank will hold a special meeting to discuss a response to the Senate’s vote.
“The opinion we will send will be done professionally and with our commitment to keeping Romania’s credibility. From my point of view, there is no need for a law in this respect,” BNR governor Mugur Isarescu said on Tuesday in a press briefing.
“The reserve is a reserve; it’s not an investment. Reserves reduce your funding costs and bring you more benefits than repatriation. We don’t gamble the reserve,” the governor of the National Bank added.
The National Bank of Romania currently holds 103.7 tonnes of gold in its official reserves, and about 65% of that gold is held in London. If the country moves forward with its plan to repatriate its gold, it will join the ranks of other countries like Germany, Hungary, Austria and the Netherlands that have moved their precious metal closer to home.
Gold analysts have been watching central-bank gold demand closely as official gold demand is expected to continue to support prices through 2019. According to the World Gold Council, central banks collectively bought 651.5 tonnes of gold in 2018, the most purchases in more than 50 years.