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October 5, 2022

BNR’s Governor Isarescu: Romania’s gold reserve kept safe, never been put at risk with speculation

Romania’s gold reserve that is being kept at the Bank of England has never been involved in arbitrage or speculation operations, because they carry risks and the gains are insignificant, governor of the National Bank of Romania (BNR) Mugur Isarescu said on Friday at the conference for the presentation of the BNR annual activity report; Isarescu somewhat ironically mentioned that it has never crossed the minds of bank representatives to “gamble the gold away at slot machines.”

“The gold that is being kept by the BNR in the account at the Bank of England – a financially solid custodian of good reputation – remains ours. It does not change hands by various operations and is at our disposal at any time. Placing the gold in arbitrage or speculation operations would involve a counterparty risk which has increased with the global crisis. A tentative gain through certain operations, as suggested in the media or by some TV shows, would involve a form of ownership disclaimer, even if the stock would remain deposited with the Bank of England and we, the National Bank’s Board of Directors, the management of the National Bank deemed that at this time, resorting to such operations for just minor gains is not advisable. It’s not worth it. After you read this subchapter, you will see that gambling the gold away at slot machines, as a certain character was hinting, has never crossed our minds,” Isarescu said.

He explained that the BNR has sought to ensure a certain balance between the foreign gold deposits and the stock kept in the country. Generally, during periods of economic or geopolitical turmoil, foreign lenders are bent to believing that only foreign gold can be a guarantee for a possible loan, having the certainty that it complies with international standards.

“It is hard to guarantee a foreign loan with gold coins, and a part of our historical reserve is indeed in gold coins. They need to be certified, counted, so standard gold is in bullions, verified, with an internationally acknowledged security mark, under international custody that guarantees the quality, density, purity, weight of the gold stock at any time,” Isarescu said.

He also explained that Romania’s gold reserve has increased by 30 tons since 1989 and that to a great extent, this massive growth is due to the conversion of surplus silver into monetary gold.

“This has led to an improvement in the structure of precious metals reserves. Silver is no longer considered a monetary asset, it is kept in the treasure of the National Bank by virtue of inertia. The conversion was a good move, which also increased the country’s credibility in the period after 1994. The rest of the increases came mainly from purchases from the domestic production until 2000, when they ceased because gold production was no longer efficient, so to say, it could no longer cover its expenses,” Isarescu said.

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