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Central banks hold gold
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September 26, 1999: 8:12 p.m. ET
15 of Europe's central banks agree to limit the sale of their gold reserves
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WASHINGTON (CNNfn) - Fifteen of Europe's central banks collectively released a statement late Saturday indicating they have no intention of selling off their gold reserves, despite moves from other central banks around the world to do so.
In a brief statement released late Saturday, the central banks collectively said that gold will "remain an important element of global monetary reserves" and that none of the 15 banks would enter into the market as sellers, with the exception of already decided upon sales that have not yet been completed.
To reinforce their decision, the group collectively decided that any gold sales already in progress will only be achieved through the maximum sale of 400 tons of gold a year over a five-year period. The banks also agreed not to expand their existing gold leasings or their use of gold futures - financial instruments that bet on which direction the price of gold will go down the road.
In a hastily assembled news conference relating to the statement, European Central Bank President Wim Duisenberg said the objective of the central banks was to create more stability for the gold market, which has seen price declines in the wake of other central banks' decisions to reduce the level of their gold holdings.
In early May, the Bank of England unveiled a plan to sell about half of its $6.5 billion of gold holdings. The announcement prompted a sell off in the gold market on concern that supply would outstrip demand for the precious metal, which most central banks hold as partial collateral against their respective currencies.
And another, less volatile program involving buying and selling gold was unveiled this week by the IMF -- part of a scheme to reduce the debt levels of poorer countries.
The 15 central banks are: Austria, France, Italy, Portugal, Switzerland, Belgium, Germany, Luxembourg, Spain, England, Finland, Ireland, Netherlands, Norway and the European Central Bank.
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