On Wednesday, House Speaker Liviu Dragnea and Senator Serban Nicolae tabled in the Senate, under emergency procedure, a bill that instructs the National Bank of Romania (BNR) to repatriate 91.5 percent of the Romanian gold deposited abroad, namely more than 56 tons of gold based on current data.
The bill also stipulates that, in case the reserves drop to a level that would endanger the state’s international transactions, the BNR would present “to Parliament and Government, at once,” a report on the status of the reserves and the causes that led or that may lead to such a drop.
At present, Romania’s gold reserves – part of its international reserves – total approximately 103.7 tons, namely 103,697 kilograms, representing 10.1 percent of the country’s international reserves. “In 2005-2018, they varied, share-wise, from 7 to 10 percent, depending on the growth of both forex reserves and the price of gold,” according to a speech recently given by BNR Deputy Governor Liviu Voinea.
The bill stipulates that the BNR seeks to maintain the reserves at a level adequate for Romania’s external transactions.
“If there is the danger of a drop in reserves, down to a level that would endanger the state’s international transactions, and also in case the drop has occurred, the National Bank of Romania presents to Parliament and Government, at once, a report on the status of the reserves and on the causes that led or may lead to such a drop. The report will contain the National Bank of Romania’s recommendations regarding the governmental macroeconomic policies required to pre-empt or remedy the situation,” the bill reads.
“From the established reserve, the National Bank of Romania can deposit gold abroad exclusively for the purpose of obtaining revenues via transactions and other specific operations. The gold deposits set up by the National Bank of Romania abroad cannot surpass 5 percent of the total quantity of gold set up as reserve,” reads another article of the bill.
According to the substantiation of the bill, “the evolution of the Romanian economy in recent years points to a positive trend featuring constant, solid and sustainable economic growth, moderate inflation within controllable limits, and the national currency’s predictable stability.” Dragnea and Nicolae claim that, in this context, the BNR policy on the setting up and management of gold deposits can be modified.
“No aspect of Romania’s economic situation still justifies keeping such a quantity of gold as a reserve abroad, with related costs, not negligible, considering that this reserve can be deposited and appropriately supplemented within the country,” the substantiation reads, adding that having gold in deposits set up abroad must not necessarily be banned but “it should be limited quantity-wise and conditioned on obtaining revenues via transactions and other specific operations.”
At present, 65 percent of the gold reserve is kept at the Bank of England.
PSD: Other European countries are also repatriating their gold reserves
In a Facebook message on Liviu Dragnea and Serban Nicolae’s bill to repatriate BNR’s gold reserve, the PSD points out that other European countries are also repatriating their gold reserves.
“On the bill promoted by PSD President Liviu Dragnea, regarding the repatriation of Romania’s gold reserve, for the moment we say only this: Germany is repatriating its gold reserve, Austria is repatriating its gold reserve, Belgium, Netherlands, Switzerland are repatriating their gold reserves,” reads the PSD message.
Nicolae, signatory of the bill alongside Dragnea: We incur costs of EUR 300,000 to keep our gold reserve in England. BNR should execute the decision
Senator Serban Nicolae (PSD) has stated for MEDIAFAX that storing Romania’s gold reserve in England is causing losses, by incurring EUR 300,000 in costs, and has stated that when Liviu Dragnea’s bill becomes law the BNR must “execute” the decision.
“Since 2004-2005, not only has the gold reserve at the Bank of England not been generating revenue, but has been generating losses, because there are some storage costs. It generates storage costs. Based on the data I have, it costs us around 300,000 euro per year to keep the gold in England. So then, the first and the simplest argument would be that we would no longer incur costs.
“Keeping the money laid aside here, it no longer costs us. On the other hand, it’s also a sign of stability. Romania is no longer an unsafe country. It’s no longer a country where there may be tensions and conflicts.
“Romania has been already having constant economic growth for several years, stable growth, the inflation is kept under control, the national currency is predictable and stable, which justifies us taking, in our own turn, a measure that other states have also taken, probably for the same reasons. (…) Germany and Austria have repatriated most of their gold reserves, at the request of the Courts of Audit and Account.
“From what I understand, in Romania nobody is auditing the BNR’s gold reserves abroad, so not even the Court of Accounts, which is profoundly unnatural,” Serban Nicolae stated on Thursday for MEDIAFAX.
The PSD Senator says that Mugur Isarescu should support the gold being periodically audited, stating that this is the reserve of the National Bank, not of the BNR Governor.
“Paraphrasing Mr Isarescu, this is not Isarescu’s reserve, it’s the BNR’s reserve. And I believe he should support this gold being periodically audited, so that we would know it’s there, that it’s not less, that it’s not in any danger and so forth. Poland, Austria, Netherlands, all these countries have lately taken measures to repatriate the gold reserves deposited abroad. Gold is a physical, material value, the BNR forms other international reserves too, bonds, all sorts of financial instruments which are ten times more valuable than the gold held at the Bank of England. The gold reserve totals approximately 103 tons, it’s not very clear, the value is in the ballpark of 3 billion, a bit over 3 billion, while the bonds in the reserve total more than 30 billion dollars,” Nicolae explained.
The Social Democrat claims that, after the bill is adopted, the BNR should “execute” the decision, adding that the Opposition should have been already convinced by the importance of the initiative.
“For the time being I have made this proposal strictly as it is. The gold should be kept within the country, by law; 5 percent at most should be taken out of the country, and only in order to generate revenue, not to be stored because it’s safer there, and I could take it out of the country if needed to obtain revenue. I haven’t consulted them (ALDE or BNR – editor’s note). It’s a decision at the level of the law, it’s my business, my decision. The BNR will have to execute a decision established by law. It’s a political and strategic decision, not technical. The Opposition should already be convinced. Why should we continue to keep the gold abroad?” the Social Democrat said.
Basescu: The most recent concern of Dragnea and Voicu’s driver is Romania’s gold reserve
Former President Traian Basescu, who is currently a PMP Senator, stated on Thursday that “the most recent concern of Dragnea and Voicu’s driver (Senator Serban Nicolae) is Romania’s gold reserve”, because they know that dictatorial regimes are sanctioned by blocking the state’s financial resources.
“Is there a dictatorship going to be established? The most recent concern of Dragnea and Voicu’s driver (Senator Serban Nicolae) is Romania’s gold reserve, namely bringing back in the country the 60 tons of gold deposited in the bank of England in order to be ‘seen’ by everybody, as an element of the country’s credibility. I don’t think he is so poorly informed that he doesn’t know that exposing the gold reserve and the foreign exchange reserves is a key-element for Romania’s credibility towards the investors and banks who lend us money”, Traian Basescu wrote on Facebook.
He also presents a possible explanation for the fact that Dragnea and Nicolae proposed a draft law to repatriate the gold reserve.
“So, what hit him and made him want the gold in Bucharest? I found just one explanation: Daddy, I mean Dragnea, and Voicu’s driver, I mean Serban Nicolae, know that the dictatorial regimes are often sanctioned by blocking the financial resources of the state that are abroad, either we’re talking about gold, foreign currency accounts or other assets, by unilateral decisions of the democratic states, until the rule of law is recovered. I wonder if Dragnea, Nicolae and their gang are preparing to impose, by laws, a dictatorial regime in the coming period, and they want to bring the gold reserve in the country because they are afraid of sanctions? I am just wondering”, Basescu concludes.
Florin Citu: The stupid draft law amending the BNR Statute, supported by the great international banking specialists Dragnea and Serban Nicolae, cannot be adopted because it violates the Constitution
National Liberal Party (PNL) Senator Florin Citu claims that the draft law amending the BNR Statute, initated by Liviu Dragnea and Serban Nicolae is unconstitutional, and furthermore, the European Central Bank has to be notified for amendments to the BNR Statute.
“The bank, the gold and the Teleorman guy! Don’t be scared. Don’t follow the trick. The stupid draft law amending the BNR Statute, supported by the great international banking specialists Dragnea and Serban Nicolae, cannot be adopted because it violates the Constitution. The draft law breaches Art.130 and Art.131 of the EU Functioning Treaty, which is part of the Romanian Constitution. Not to say that ECB had to be notified for amendments to the BNR Statute”, Florin Citu stated on Facebook.
He claims that “the draft law contains only stupid things that clearly show that the two authors don’t know anything about what they have signed”.
“I’ll tell you what you didn’t know, the authors of this draft law are not just Mr. Socol and Mr. Valcov, but also the organized and very vocal group that puts pressure on BNR for several months. As for the initiators of this law, it is very clear that simply attending the meetings at which the BNR leaderships gives economy lessons is not enough. #CititulNuAOmoratPeNimeni (#ReadingHasn’tKilledAnyone – e.n.) Their cheap and totally illiterate attempt in terms of economy to present the PSD leader as a true Romanian repatriating the gold is just a bluff. He doesn’t fool anyone anymore. Liviu and Serban, why don’t you make a draft law to bring back the gold from Moscow? Will the boss be upset?”, the PNL Senator added.
Citu also mentioned that the reserves are international because they are held in instruments denominated in other currencies than in RON. If this changes from “administering the international reserves” to “administering the reserves”, BNR will be forced to hold the reserve only in RON. “What a risk management!” he added.
The PNL Senator also shows that the draft law allows the central bank to play with the gold reserve exclusively to obtain profit. “Dear authors and dear initiators, when you perform transactions, losses also occur. Show me what you can in this case. You are upset for the ROBOR increase and you want to make it more stable, but you want a higher volatility in managing the foreign currency reserves. Are you sure this is what you want?”, Citu added.