by Alasdair Macleod - Finance And Economics.org
Published : March 05th, 2012
531 words - Reading time : 1 - 2 minutes
Recently there have been reports that if Greece defaults on the new bail-out package, creditors will be entitled to seize her gold. Whether or not this is true, it raises one big question: given the severe financial and economic crisis in Europe, what is the current collective attitude of the eurozone central banks to gold?
Bear in mind that these central banks sought to end any monetary role for gold after the Bretton Woods system fell apart in the early 1970s. More recently, as signatories to the three consecutive Central Bank Gold Agreements, they have perhaps seen gold as a source of funds as well. But those were “happier times” for them, when progressively greater central planning and increased regulation went unchallenged by the markets. But now that monetary authorities are facing increasing criticism, the central banks’ strategy towards gold today must logically be completely different: either gold is an asset whose value has to be maximised as collateral, or it has to be held on to as a “last resort” asset. Vested interests have fundamentally altered with the change in circumstances now forced upon eurozone governments.
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