Isărescu: "Almost all central banks keep half of their gold stock in an international center"

Almost all central banks, with one exception, keep half of their gold stock in an international center, both for credibility and for possible quick loans, stated yesterday the governor of the National Bank of Romania, Mugur Isărescu, on the occasion of an event organized at the BNR.

The governor said: "I noticed the interest shown by the public opinion for the issue of the yellow metal and especially the gold from the treasury of the National Bank. Even though Keyens once called him a barbaric relic of mankind, a simple, clear judgment permeated public thought and debate. You go 3,000 meters deep to bring it to the surface, because gold is very difficult to extract, and then you put it all in the ground, in the treasury of the central bank and what for, says Keynes. For credibility. But, he continues the judgement, we cannot get the credibility of the central bank, the confidence in the currency and in other ways. And hence the theory that it is necessary to strengthen the institutions of the central banks, their independence, and then we no longer need gold".

Mugur Isărescu added: "But forget that gold has not disappeared from monetary theory, which is why we took it into the debate. Because the question often arises - why do you keep some of our gold in Mos ... excuse me in London, because in Moscow we don't keep it. They keep it there for us. And why don't you bring it into the country. Almost all central banks, with one exception, keep half of their gold stock in an international center. For credibility and for possible quick operations, because by pledging the gold you can get a loan in a few hours. You don't have to negotiate too much for an emergency."

The Governor also emphasized the need for communication between the central bank and the Government. "A central banker cannot afford the luxury of isolating himself in an ivory tower. Here we have an important transformation compared to the 90s, when some thought that it was not even good to talk to the Government. We stand apart and see each other by our independence. I have practically never accepted this. Dialogue with the Government does not mean that you are subordinate, but on the contrary, if you maintain your strong principles (...). The soundness of the arguments and the lucidity of the approaches are essential ingredients of a professional and coherent debate. I cannot refrain from quoting Professor Costin Murgescu, who said and repeated every time that "The debate is the economist's laboratory. We don't have another laboratory where we can do experiments", Isărescu said.