Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesHot NewsMost Read NewsRecomm.Business LeadersCalendar 

World Gold Council : Gold-backed bonds offer an alternative to austerity, confirms new white paper

share with twitter share with LinkedIn share with facebook
share via e-mail
0
11/11/2012 | 02:17pm CET
11 Nov, 2012

Download this document (0.1 MB)

A report published by leading monetary and Eurozone academic Professor Ansgar Belke, suggests that those Eurozone Member States worst affected by the sovereign debt crisis, with sufficient gold reserves, could use their gold as collateral to reduce debt servicing costs.

Gold-backed sovereign debt or a 'gold-backed bond' is debt, which is partially secured by gold. Using a portion of a nation's gold reserves in this way would be a temporary step to recovery for Eurozone Member States, enabling them to borrow more cheaply through bridge-financing.

Professor Belke is a Monetary Expert Panellist for the Economic and Monetary Affairs Committee of the European Parliament and is the Jean Monnet Professor at the University of Duisberg-Essen. Commenting on the report Professor Belke said:

"Using gold as collateral for new sovereign debt issues would alleviate some pressure in the short term and facilitate a return to growth. Gold-backed bonds would have an advantage over the existing non-conventional monetary policy tools, such as Outright Monetary Transactions (OMT), introduced by the European Central Bank (ECB) to tackle the Eurozone debt crisis to date. The ECB's balance sheet would be largely unaffected in the end, as the gold that sits within national central bank reserves would be more than sufficient to collateralise the bonds. It would lower sovereign debt yields without increasing inflation and would give some of the Eurozone's most distressed countries additional time to work on economic reform and recovery."

The report notes that not all Eurozone countries have enough gold in their reserves for this to be a viable solution. However, for those with significant holdings, relative to their short-term financing requirements, such as Italy and Portugal, this represents a real alternative.

Italy and Portugal hold gold reserves of 24 and 30 per cent of their two year funding requirements respectively. In the case of Portugal, the paper demonstrates that a sovereign bond backed by one-third gold could reduce yields on sovereign debt by around one third.

Natalie Dempster, Director, Government Affairs at the World Gold Council, adds:

"While there are clearly important political and legal considerations that need to be addressed, gold has been used in the past to secure loans in Portugal, Italy and India and such a measure would certainly offer a partial solution to Europe's current woes and an alternative to austerity measures."

The report entitled 'A more effective Eurozone monetary policy - gold-backed sovereign debt', was commissioned by the World Gold Council to independently evaluate and test its proposals on the use of gold as collateral for Eurozone sovereign debt.

For more information and to download the white paper

Brenda Bates
World Gold Council
T: +44 20 7826 4706
E: brenda.bates@gold.org 

Claire Maloney
Capital MSL
T: +44 20 7307 5341
E: claire.maloney@capitalmsl.com 

Download this document (0.1 MB)

distributed by
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news
Date Title
03:54p DGAP-REGULATORY : TUI AG: Awards of Phantom Shares Under Long Term Incentive Programmes
03:53p Aaron Merkin Joins Aclara as the Company's First Chief Technology Officer
03:53p Economic Development Flourishes in Northeast Florida
03:52p $92.40 Billion LED Lighting Market by Installation Type, End-Use Application, Product Type and Geography - Global Forecast to 2022 - Research and Markets
03:51p HIQ INTERNATIONAL : INVITATION TO THE PRESENTATION OF HiQ'S YEAR-END REPORT AT 9.00 A.M. ON 31 JANUARY
03:51p GRAN TIERRA ENERGY INC. : Results of Operations and Financial Condition, Financial Statements and Exhibits (form 8-K)
03:50p ABBVIE : Marking the Route to Sustainable Health Care
03:50p FARMERS COOPERATIVE : Jan 23, 2017 Friday’s markets closed mixed with corn closing 4 cents higher… more
03:50p $23.01 Billion Power Transformer Market by Rating (Low, Medium and High) - Global Opportunity Analysis and Industry Forecasts 2014-2022 - Research and Markets
03:50p COMMANDER RESOURCES LTD. : Commander Acquires Rebel Zinc Project, BC
Latest news
Advertisement
Hot News 
-7.41%LAMPRELL : Rig builder Lamprell sees lower revenue, tightens purse strings
-2.16%PHILIPS LIGHTING : sees brighter 2017 as fourth-quarter profit disappoints
-2.19%ESSENTRA : sees full-year operating profit near lower end of forecast
1.19%HAMMERSON : Sainsbury's chairman reprimanded for using employee on country home
-0.69%Generali shares up 5 percent on report of Intesa, Allianz interest
Most Read News
04:07a SAMSUNG ELECTRONICS : says batteries caused Note 7 fires, may delay new phone launch
09:35a TRUMP TO COMPANY EXECUTIVES : We think we can cut regulations by 75 percent
12:16aDJNEWS HIGHLIGHTS : Top Energy News of the Day
08:38a MCDONALD : fourth-quarter U.S. comparable sales fall less than expected
01:31a CGG : Reduction of certain vessel charter cash costs and related issuance of $58.6 million of senior notes
Most recommended articles
01/17DJS&P 500, Nasdaq Futures -- Technical Analysis
09:43a TSX falls as lower oil weighs on energy stocks
09:35a TRUMP TO COMPANY EXECUTIVES : We think we can cut regulations by 75 percent
09:34a BLACKSTONE LP : Canada's Trudeau, ministers to discuss Trump plans for NAFTA
09:30a Top banks' fourth-quarter commodities revenue jumps 20-25 percent - report