Tag Archives: ECB

European Central Bank gold reserves held across 5 locations. ECB will not disclose Gold Bar List.

The European Central Bank (ECB), creator of the Euro, currently claims to hold 504.8 tonnes of gold reserves. These gold holdings are reflected on the ECB balance sheet and arose from transfers made to the ECB by Euro member national central banks, mainly in January 1999 at the birth of the Euro. As of the end of December 2015, these ECB gold reserves were valued on the ECB balance sheet at market prices and amounted to €15.79 billion. 

The ECB very recently confirmed to BullionStar that its gold reserves are stored across 5 international locations. However, the ECB also confirmed that it does not physically audit its gold, nor will it divulge a bar list / weight list of these gold bar holdings.

Questions and Answers

BullionStar recently put a number of questions to the European Central Bank about the ECB’s gold holdings. The ECB Communications Directorate replied to these questions with answers that appear to include a number of facts about the ECB gold reserves which have not previously been published. The questions put to the ECB and its responses are listed below (underlining added):

Question 1:The 2015 ECB Annual Report states that as at 31 December 2015, the ECB held 16,229,522 ounces of fine gold equivalent to 504.8 tonnes of goldGiven that the ECB gold holdings arose from transfers by the respective member central banks, could you confirm the storage locations in which this ECB gold is currently held (for example at the Bank of England etc), and the percentage breakdown of amount stored per storage location.”

ECB Response:The gold of the ECB is located in London, Paris, Lisbon, New York and Rome. The ECB does not disclose its distribution over these places. The gold of the ECB is stored there because it was already stored there before ownership was transferred to the ECB and moving it was seen and is seen as too costly.

Question 2: “Could you clarify as to how, if at all, this gold is audited, and whether it physical audited by the ECB or by a 3rd party?”

ECB Response:The ECB has no physical audit of its gold bars. The gold bars that the ECB owns are individually identified and each year the ECB receives a detailed statement of these gold deposits. The central banks where the gold is stored are totally reliable.

Question 3: “Finally, can the ECB supply a full weight list of the gold bars that comprise the 504.8 tonnes of gold referred to above?”

ECB Response:The ECB does not disclose this information.


London, New York, Paris, Rome, Lisbon

Given that some of the information shared by the ECB has arguably not been in the public record before, each of the 3 ECB answers above is worth further exploration.

In January 1999, when the Euro currency was created (Stage 3 of Economic and Monetary Union), each founding member national central bank (NCB) of the Euro transferred a quantity of foreign reserve assets to the ECB. Of these transfers, 85% was paid to the ECB in the form of US dollars and Japanese Yen, and 15% was paid to the ECB in the form of physical gold.

Initially in January 1999, central banks of 11 countries that joined the Euro made these transfers to the ECB, and subsequently the central banks of a further 8 countries that later joined the Euro also executed similar transfers to the ECB.

All of the foreign exchange and gold reserves that were transferred to and are owned by the ECB are managed in a decentralised manner by the national central banks that initiated the transfers. Essentially, each national central bank acts as an agent for the ECB and each NCB still manages that portion of reserves that it transferred to the ECB. This also applies to the transferred gold and means that the gold transferred to the ECB never physically moved anywhere, it just stayed where it had been when the transfers of ownership were made.

That is why, as the ECB response to Question 1 states: “The gold of the ECB is stored there because it was already stored there before ownership was transferred to the ECB”.

What is probably most interesting about the latest ECB statement is that it names 5 city locations over which the ECB’s gold is stored. The 5 gold storage locations stated by the ECB are London, New York, Paris, Rome and Lisbon. Since the gold transferred to the ECB in 1999 by the national central banks would have already been stored in central banks gold vaults, these 5 city locations undoubtedly refer to the gold vaults of:

  • the Bank of England
  • the Federal Reserve Bank of New York
  • the Banque de France
  • the Banca d’Italia
  • Banco de Portugal

The fact the ECB’s gold holdings are supposedly stored at these 5 locations can be explained as follows:

Table 1: Central bank FX and Gold transfers to the ECB, January 1999

Between 4th and 7th January 1999, 11 central banks transferred a total of €39.469 billion in reserve assets to the ECB (in the form of gold, cash and securities). Of this total, 15% was in the form of gold, amounting to 24 million ounces of gold (747 tonnes of gold) which was valued at that time at €246.368 per fine ounce of gold, or €5.92 billion. The 85% transferred in the form of currencies comprised 90% US Dollars and 10% Japanese Yen. See pages 152 and 153 of ECB annual report 1999 for more details.

The 11 central banks that made the transfers to the ECB in January 1999 were the central banks of Belgium, Netherlands, Germany, France, Luxembourg, Italy, Ireland, Austria, Finland, Spain and Portugal. See Table 1 for details of these gold transfers, and the amount of gold transferred to ECB ownership by each central bank.

The value of reserves transferred to the ECB by each national central bank were based on a percentage formula called a ‘capital key’ which also determined how much each central bank subscribed to the founding capital of the ECB. This capital key was based on equally weighting the percentage of population and GDP each Euro founding member economy represented, therefore central banks such as Deutsche Bundesbank, Banque de France, and Banca d’Italia comprised the largest transfers, as can be see in Table 1. It also meant that these 3 central banks transferred the largest amounts of gold to the ECB, with the Bundesbank for example transferring 232 tonnes of gold to the ECB.

The Bundesbank gold transfer to the ECB in January 1999 took place at the Bank of England. The Bundesbank actually confirmed in its own published gold holdings spreadsheet that this transfer took place at the Bank of England. See spreadsheet Column 5 (BoE tonnes), Rows 1998 and 1999, where the Bundesbank gold holdings fell by 332 tonnes between 1998 and 1999 from 1,521 tonnes to 1,189 tonnes and also see Column 20 where gold lending rose from 149 tonnes to 249 tonnes. Therefore, between 1998 and 1999, 232 tonnes of gold was transferred from the Bundesbank gold account at the bank of England to the ECB account at the Bank of England, and 100 tonnes was added to the Bundesbank’s gold loans.

Paris and Rome

The Banque de France currently stores the majority (over 90%) of its gold reserves in its own vaults in Paris, so it it realistic to assume that when the Banque de France transferred 159 tonnes of gold to the ECB in January 1999, it did so using gold stored in the Banque de France vaults in Paris. Likewise, it is realistic to assume that the Banca d’Italia, which currently stores half of its gold reserves at its own vaults in Rome, transferred 141 gold stored in its Rome vaults to the ECB in 1999. This would explain the Paris and Rome gold holdings of the ECB. While a few ex French colony central banks are known to have historically stored gold with the Banque de France in Paris, none of the founding members of the Euro (apart from the Bundesbank) are on the record as having stored gold in Paris, at least not for a long time. The Banca d’Italia is not known for storing gold on behalf of other national central banks.

Lisbon and New York

The Banco de Portugal currently holds its gold reserves in Lisbon and also at the Bank of England, the Federal Reserve Bank of New York (FRBNY), and with the BIS. The ECB gold stored in Lisbon, Portugal most likely refers to the 18.2 tonnes of gold transferred by the Banco de Portugal to the ECB in January 1999, because a) that makes most sense, and b) the Banco de Portugal is not known as a contemporary gold custodian for other central banks.

Of the other 7 central banks that transferred gold to the ECB in January 1999, the central banks of Austria, Belgium and Ireland store most of their gold at the Bank of England so are the most likely candidates to have made gold transfers to the ECB at the Bank of England. See BullionStar blog “Central bank gold at the Bank of England” for more details of where central banks are known to store gold.

The Netherlands and Finland currently store some of their gold reserves at the Bank of England and at the Federal Reserve Bank of New York and probably also did so in 1998/99, so one or both of these banks could have made transfers to the ECB at the FRBNY. Another contender for transferring gold held at the FRBNY is the Spanish central bank since it historically was a holder of gold at the NYFED. It’s not clear where the central bank of Luxembourg held or holds gold but it’s not material since Luxembourg only transferred just over 1 tonne to the ECB in January 1999.

Greece and Later Euro members

Greece joined the Euro in January 2001 and upon joining it transferred 19.5 tonnes of gold to the ECB. Greece is known for storing some of its gold at the FRBNY and some at the Bank of England, so Greece too is a candidate for possibly transferring New York held gold to the ECB. In theory, the ECB’s New York held gold may not have even arisen from direct transfers from Euro member central banks but could be the result of a location swap. Without the national central banks or the ECB providing this information, we just don’t know for sure how the ECB’s New York gold holdings arose.

Another 7 countries joined the Euro after Greece. These countries were Slovenia on 1st January 2007, Malta and Cyprus 1st January 2008, Slovakia 1st January 2009, Estonia 1st January 2011, Latvia 1st January 2014, and Lithuania 1st January 2015. The majority of these central banks made gold transfers to the ECB at the Bank of England. In total these 7 central banks only transferred 9.4 tonnes of gold to the ECB, so their transfers are not really material to the ECB’s gold holdings.

ECB Gold Sales: 271.5 tonnes

More importantly, the ECB sold 271.5 tonnes of gold between Q1 2005 and Q1 2009. These sales comprised 47 tonnes announced on 31 March 2005, 57 tonnes announced 31 March 2006,  37 tonnes over April and May 2007 announced 1 June 2007, 23 tonnes of sales completed on 30 November 2006, 42 tonnes announced 30 November 2007, 30 tonnes of completed sales announced 30 June 2008, and 35.5 tonnes completed in Q1 2009.

These sales explain why the ECB currently only holds 504.8 tonnes of gold:

i.e. 766.9 t (including Greece) – 271.5 t sales + 9.4 t smaller member transfers = 504.8 t

The ECB does not provide, nor has ever provided, any information as to where the 271.5 tonnes of gold  involved in these 2005-2009 sales was stored when it was sold. The fact that the ECB still claims to hold gold in Paris, Rome and Lisbon, as well as London and New York, suggests that at least some of the gold transferred by the Banque de France, Banca d’Italia and Banco de Portugal in 1999 is still held by the ECB.

If the ECB had sold all the gold originally transferred to it by all central banks other than France, Italy, Portugal and Germany, this would only amount to 197 tonnes, so another 74 tonnes would have been needed to make up the shortfall, which would probably have come from the ECB holdings at the Bank of England since that is where most potential central bank and bullion bank buyers hold gold accounts and where most gold is traded on the international market.

Even taking into account Greece’s 19.4 tonne gold transfer to the ECB in January 2001, and excluding the French, Italian, German and Portuguese transfers in 1999, the ECB’s 271.5 tonnes of gold sales would still have burned through all the smaller transfers and left a shortfall. So the ECB gold sales may have come from gold sourced from all of its 5 storage loacations.

It’s also possible that one or more of the original 11 central banks transferred gold to the ECB that was stored at a location entirely distinct from the 5 currently named locations, for example gold stored at the Swiss National Bank. If that particular gold was then sold over the 2005-2009 period, it would not get picked up in the current locations. It’s also possible that some or all of the 271.5 tonnes of gold sold by the ECB over 2005-2009 had been loaned out, and that the ‘sales’ were just a book squaring exercise in ‘selling’ gold which the lenders failed to return, with the loan transactions being cash-settled.

Draghi resumes ECB press conference after being attacked by protester

No Physical Audit of ECB Gold

Given that the Euro is the 2nd largest reserve currency in the world and the 2nd most traded currency in the world, the ECB’s gold and how that gold is accounted for is certainly a topic of interest. Although the ECB’s gold doesn’t directly back the Euro, it backs the balance sheet of the central bank that manages and administers the Euro, i.e. the ECB.

The valuation of gold on the ECB’s annual balance sheet also adds to unrecognised gains on gold in the ECB’s revaluation account. Given gold’s substantial price appreciation between 1999 and 2015, the ECB’s unrecognised gains on gold amount to €11.9 billion as of 31 December 2015.

It is therefore shocking, but not entirely surprising, that the ECB doesn’t perform a physical audit of its gold bars and has never done so since initiating ownership of this gold in 1999. Shocking because this lack of physical audit goes against even the most basic accounting conventions and fails to independently prove that the gold is where its claimed to be, but not surprising because the world of central banking and gold arrogantly ignores and bulldozes through all generally accepted accounting conventions. Geographically, 2 of the locations where the ECB claims to store a percentage of its gold are not even in the Eurozone (London and New York), and infamously, the Bundesbank is taking 7 years to repatriate a large portion of its gold from New York, so the New York storage location of ECB gold holdings should immediately raise a red flag. Furthermore, the UK is moving (slowly) towards Brexit and away from the EU.

Recall the response above from the ECB:

The ECB has no physical audit of its gold bars. The gold bars that the ECB owns are individually identified and each year the ECB receives a detailed statement of these gold deposits. The central banks where the gold is stored are totally reliable.

Imagine a physical-gold backed Exchange Traded Fund (ETF) such as the SPDR Gold Trust or iShares Gold Trust coming out with such a statement. They would be run out of town. References to ‘totally reliable’ are all very fine, but ‘totally reliable’ wouldn’t stand up in court during an ownership claim case, and assurances of ‘totally reliable’ are not enough, especially in the gold storage and auditing businesses.

The ECB is essentially saying that these ‘statements’ of its gold deposits that it receives from its storage custodians are all that is needed to for an “audit” since the custodians are ‘totally reliable‘.

This auditing of pieces of paper (statements) by the ECB also sounds very similar to how the Banca d’Italia and the Deutsche Bundesbank conduct their gold auditing on externally held gold i.e. they also merely read pieces of paper. Banca d’Italia auditsannual certificates issued by the central banks that act as the depositories” (the FRBNY, the Bank of England, and the SNB/BIS).

The Bundesbank does likewise for its externally held gold (it audits bits of paper), and solely relies on statements from custodians that hold its gold abroad. The Bundesbank actually got into a lot of heat over this procedure in 2012 from the German Federal Court of Auditors who criticised the Bundesbank’s blasé attitude and lack of physical auditing, criticism which the Bundesbank’s executive director Andreas Dombret hilariously and unsuccessfully tried to bury in a speech to the FRBNY  in New York in November 2012 in which he called the controversy a “bizarre public discussion” and “a phantom debate on the safety of our gold reserves“, and ridiculously referred to the movies Die Hard with a Vengeance and Goldfinger, to wit:

“The days in which Hollywood Germans such as Gerd Fröbe, better known as Goldfinger, and East German terrorist Simon Gruber, masterminded gold heists in US vaults are long gone. Nobody can seriously imagine scenarios like these, which are reminiscent of a James Bond movie with Goldfinger playing the role of a US Fed accounting clerk.”

Where is the ECB Gold Bar Weight List?

Since, as the ECB states, it’s gold bars are “individually identified“, then gold bar weight lists of the ECB’s gold do indeed exist. This then begs the question, where are these weight lists, and why not release them if the ECB has nothing to hide?

Quickly, to define a weight list, a gold bar weight list is an itemised list of all the gold bars held within a holding which uniquely identifies each bar in the holding. In the wholesale gold market, such as the London Gold Market, the LBMA’s “Good Delivery Rules” address weight lists, and state that for each gold bar on a weight list, it must list the bar serial number, the refiner name, the gross weight of the bar, the gold purity of the bar and the fine weight of the bar. The LBMA also state that “year of manufacture is one of the required ‘marks’ on the bar”.

Recall from above that when the ECB was asked to provide a full weight list of its 504.8 tonnes of gold bars, it responded: The ECB does not disclose this information.

After receiving this response, BullionStar then asked in a followup question as to why the ECB doesn’t disclose a weight list of the gold bars. The ECB responded (underlining added):

“We would like to inform you that, while the total weight and value of the gold held by the European Central Bank (ECB) can be considered to be of interest to the public, the weight of each gold bar is a technicality that does not affect the economic characteristics of the ECB’s gold holdings. Therefore the latter does not warrant a publication.

It is a very simple task to publish such a weight list in an automated fashion. The large gold backed ETFs publish such weight lists online each and every day, which run in to the hundreds of pages. Publication of a weight list by the ECB would be a very simple process and would prove that the claimed bars are actually allocated and audited.

This ECB excuse is frankly foolish and pathetic and is yet another poorly crafted excuse in the litany of poorly crafted excuses issued by large gold holding central banks in Europe to justify not publishing gold bar weight lists. The Dutch central bank recently refused to issue a gold bar weight list since it said it would be too costly and administratively burdensome. The Austrian central bank in refusing to publish a weight list claimed as an excuse that it “does not have the required list online“. Last year in 2015, the German Bundesbank issued a half-baked useless list of its gold bar holdings which was without the industry standard required refiner brand and bar serial number details.  (For more details, see Koos Jansen BullionStar blogs “Dutch Central Bank Refuses To Publish Gold Bar List For Dubious Reasons“, and “Central Bank Austria Claims To Have Audited Gold at BOE. Refuses To Release Audit Reports & Gold Bar List“, and a Peter Boehringer guest post “Guest Post: 47 years after 1968, Bundesbank STILL fails to deliver a gold bar number list“).

The more evidence that is gathered about the refusal of central banks to issue industry standard gold bar weight lists, the more it becomes obvious that there is a coordinated understanding between central banks never to release this information into the public domain.

The most likely reason for this gold bar weight list secrecy is that knowledge of the contents of central bank gold bar weight lists could begin to provide some visibility into central bank gold operations such as gold lending, gold swaps, location swaps, undisclosed central bank gold sales, and importantly, foreign exchange and gold market interventions. This is because with weight list comparisons, gold bars from one central bank weight list could begin turning up in another central bank weight list or else turning up in the transparent gold holdings of vehicles such as gold-backed Exchange Traded Funds.


Instead of being fixated with the ECB’s continual disastrous and extended QE policy, perhaps some financial journalists could bring themselves to asking Mario Draghi some questions about the ECB gold reserves at the next ECB press briefing, questions such as the percentage split in storage distribution between the 5 ECB gold storage locations, why ECB gold is being held in New York, why is there no physical audit of the gold by the ECB, why does the ECB not publish a weight list of gold bar holdings, and do the ECB or its national central bank agents intervene into the gold market using ECB gold reserves.

The lackadaisical attitude of the ECB to its gold reserves by never physically auditing them is also a poor example to set for all 28 of the central bank members of the European System of Central Banks (ESCB), and doesn’t bode well for any ESCB member central bank in being any less secretive than the ECB headquarters mothership.

If gold does re-emerge at the core of a revitalised international monetary system and takes on a currency backing role in the future, the haphazard and non-disclosed distribution of the ECB’s current gold reserves over 5 locations, the lack of physical gold audits, and the lack of public details of any of the ECB gold holdings won’t really inspire market confidence, and is proving to be even less transparent than similar metrics from that other secretive large gold holding bloc, i.e the USA.

Spotlight on Greece’s Gold Reserves and Grexit

With the Greek Government and the Troika back in the news right now, it’s a good time to take a look at Greece’s official gold reserves and examine how much gold Greece claims to hold, where this gold might be located, and explore the impact that the European bailouts or a Greek Euro exit might have on the Greek gold holdings.

The 2012 Annual report of the Bank of Greece, the most recent full annual report available, provides some useful background on the Greek gold reserves. The Bank’s full 2013 annual report has not yet been posted on its website, and the 2014 annual report has not yet been published.

In the 2012 report, the Bank of Greece claims to hold on its balance sheet, ‘gold and gold receivables’ of 4,746,000 fine troy ounces (147.6 tonnes).

As of 31st December 2012, based on a gold price of €1,261.179 per fine ounce, this ‘gold and gold receivables’ asset item was valued in the balance sheet at €5.985 billion.

The 147.6 tonne total of gold reserves might seem a lot higher than figures of 112 tonnes or 117 tonnes that are sometimes quoted in economic statistics or in the media. However, the 147.6 tonne figure includes a claim, by the Bank of Greece on the Greek State, for gold that was paid by the Bank of Greece to the IMF (subscriptions and quota increases etc) on behalf of the Greek State.

As the 2012 annual report states:

“The amounts reported above comprise the Bank’s gold holdings (3,597 thousand ounces) and gold receivables from the Greek State (986 thousand ounces) corresponding to Greece’s participation in the IMF (the gold component of Greece’s quota has been paid by the Bank of Greece on behalf of the Greek State), as well as scrap gold and gold coins for melting (163 thousand ounces). A large part of gold holdings is kept with banks abroad.

(Source: ‘Notes on the balance Sheet’ 2012 Annual Report, Page 209 of the pdf, page A15 of the report).

Gold Claim on Hellenic Republic

Why the Greek State has never paid back this 986,000 oz gold debt to the Bank of Greece is puzzling, but there would appear to be little chance of the repayment happening any time soon given the Greek State’s current fiscal position.

Since Greece was one of the original members of he IMF back in 1945, the Bank of Greece gold claim on the Greek State may be a very long-standing claim and would comprise some or all of the initial gold subscription to the IMF in 1947, and various IMF quota increases that were implemented in 1958-59, 1965 and 1970.

I think it’s misleading for the Bank of Greece to throw in this gold claim against the Greek State within its “gold and gold receivables” line item in the balance sheet. Even though it is a receivable in gold, it is not even the type of gold receivable that the European central banks had in mind when they pressured the IMF back in 1999 to deem the “gold and gold receivable” classification device as a legitimate accounting approach. (See below for a background on that issue).

In my view this 986,000 Oz gold obligation on the Greek State should be itemised separately and not listed as part of the monetary gold holding line item. Where is this 986,000 Ozs of gold? It doesn’t even exist, except as a gold holding of the IMF and should not be double counted.

Excluding this 986,000 oz (30.66 tonnes) IMF related claim on the Greek State, the Bank of Greece says it holds a total of 3.76 million ozs of gold (3,597,000 ozs + 163,000 ozs) which is roughly 117 tonnes. Excluding the scrap gold and gold coins, the figure is 3.597 million ozs, which is approximately 112 tonnes.

The Fantasy of ‘Gold and Gold Receivables’

Note that the 3.76 million ounce figure from 2012, excluding the IMF gold claim, is still in itself ‘gold and gold receivables’ and not necessarily earmarked gold held. The percentage of ‘gold receivables’ within the 3.76 million ounce figure, such as gold lent or gold swapped, is not divulged.

The Bank of Greece uses the ‘gold and gold receivables’ gimmick because the Bank, along with all Eurosystem banks and most other central banks around the world, follows IMF central bank accounting guidelines when accounting for its gold holdings. And IMF accounting guidelines do not follow generally accepted accounting principles in this area.

In 1999, the IMF, following objections from European central bank officials at the Bank of England, Deutsche Bundesbank, European Central bank (ECB) and Banque de France, back-tracked on a plan to introduce individual line item categories for gold and ‘gold receivables’ in the reserves data template of its Special Data Dissemination Standard, because breaking out this data into separate items would have revealed the workings of the gold loan and gold swap market, or what the IMF calls ‘highly market sensitive’ information.

An IMF Executive Board paper from 1999, explains the issue:

“15. Central bank officials** indicated that they considered information on gold loans and swaps to be highly market-sensitive, in view of the limited number of participants in such transactions. Thus, they considered that the SDDS reserves template should not require the separate disclosure of such information but should instead treat all monetary gold assets, including gold on loan or subject to swap agreements, as a single data item. (page 6)

** The ‘central bank officials’ referred to above were as follows:

“7.  ……At the same time the (IMF) staff consulted the Bank of England, the Deutsche Bundesbank, the Banque de France, and the European Central Bank to review practical and methodological difficulties they might encounter in implementing the CGFS template, in light of recent decisions on publication of reserves data in the Eurosystem. (page 4)”

According to the latest IMF official reserves asset data for Greece,  the Bank of Greece now claims to have monetary gold holding of 3.62 million ozs, marginally up from 3.597 million ozs. In fact, the monthly foreign reserves figures for the Bank of Greece (xls) frequently show small increases in the ‘Monetary gold (millions of the troy ounces)’ category, about 9,000 ozs per year or slightly less than 1,000 ozs per month.

This increase in gold holdings could be reflecting interest in the form of gold received on gold deposits (gold loans) with bullion banks, and may suggest that the Bank of Greece has outstanding short-term gold loans that are being rolled over with the bullion banks (in the London gold market). Interest received on central bank gold deposits (time deposits) with bullion banks is often in the form of gold (accrued interest in gold).

Central Bank of Greece

Where is the Greek gold?

On the question of the location of the Bank of Greece gold reserves, the only locational information provided on the gold reserves in the 2012 annual report, was that ‘a large part‘ of the gold was held abroad.

Earlier Bank of Greece annual reports, from 2007 - 2010, state that “The largest part of gold holdings is kept in banks abroad.” It was only since 2011 that the wording ‘a large part is kept abroad‘ was introduced. Semantics maybe, however, the change in wording could indicate that some of the gold that was held abroad had been repatriated back to Greece sometime between 2010 and 2011. This was around the time that the Greek fiscal budget started to deteriorate rapidly.

Alternatively, the previous phraseology could have included the Bank’s IMF gold claim since by definition, this gold is held by the IMF in its gold despositories, which are all located outside of Greece. But it’s not clear from the wording whether the gold claim on the Greek State has ever been included or excluded from the reference to where the gold reserves were located.

Whatever the reason, it became less important on 1st March 2013, when Bloomberg published an article about the size and location of the Greek gold reserves. This article was based on a letter written by the Bank of Greece that had been forwarded by the Finance Ministry to a lawmaker in the Greek Parliament in response to the lawmaker’s query.

The letter stated that as of 31st December 2012, Greek gold reserves totalled 3.76 millon ounces (approximately 117 tonnes). This figure tallies with the figure from the above 2012 annual report.

On the location of the gold, Bloomberg said that, according to the document:

Half is held at the central bank in Greece while the remainder is held at the Federal Reserve Bank of New York, the Bank of England and in Switzerland.”

The same day, 1st March 2013, the Greek Ministry of Foreign Affairs and various Greek news agencies confirmed the Bloomberg story in slightly more detail, with the Ministry of Foreign Affairs releasing a statement stating that:

“Greece’s gold reserves totalled 3.760 million ounces at the end of 2012, worth 4.74 billion euros, the country’s central Bank of Greece (BoG) said on Friday.

In a report to Parliament, communicated through Finance Minister Yannis Stournaras responding to a question by parliament deputies over the country’s gold reserves, the central bank said that Greece’s natural gold reserves at the end of 2012 amounted to 3.760 million ounces, worth 4.74 billion euros, of which half were under the custody of the Bank of Greece and the remaining under the custody of the Federal Bank of New York, the Bank of England and Switzerland.

The central bank noted that gold reserves which had been transferred for custody to the Bank of England during the Second World War were repatriated gradually in 1946-1956.”

The Bank of Greece therefore appears to currently maintain a 50/50 split between domestic and foreign held gold. This again may suggest that something changed after 2010 which altered the wording of ‘the largest part’ of the reserves being stored abroad. Where the domestically stored Greek gold is held, I’m not sure. Possibly in a vault in the Bank’s headquarters in Athens. Who knows.

The Federal Reserve Bank of New York (FRBNY) and Bank of England as gold custodians for Greece’s gold is not surprising given that many foreign central banks store gold with these two institutions.

The Bank of Greece has historically had a gold set-aside account at the Bank of England, not least for the Tripartite Commission’s gold distributions. Separately, in the IMF gold restitutions to its members in the late 1970s, the Bank of Greece did not use the Bank of England or the Banque de France or the Reserve Bank of India to receive restituted gold, so this implies that Greece used the FRBNY and would have needed a gold account at the FRBNY.

The reference to Switzerland by the Greeks would either be a) a gold deposit or earmarked gold held with the Bank for International Settlements (BIS), b) earmarked gold held directly with the Swiss National Bank in Berne, or c) gold held with a Swiss commercial bank in Zurich such as Credit Suisse or UBS.

Swiss National Bank

As to how much of the 50% of the Greek gold that’s stored abroad is in each of the three storage locations (New York, London and Switzerland), or how much of this gold is actually earmarked in custody is unclear. Some or all of this gold could be loaned or swapped or, as central banks like to say in their gold legal agreements, the gold may have other “liens, claims or encumbrances” against it.

Given the perilous state of Greek finances, the custodial status of the Greek gold held with the Bank of England, FRBNY and in Switzerland deserves scrutiny. This would also apply to the 50% of the Greek gold that’s supposedly held by the Bank of Greece within Greece. This scrutiny will probably never be forthcoming however due to the unaccountability and lack of transparency on everything gold related within the world of central banking.

Seizing the Greek Gold? Not like Cyprus

In February 2012 during negotiations on Greece’s 2nd bailout (Second Economic Adjustment Programme of March 2012), the New York Times wrote an article quoting a Greek politician, Louka Katseli, who was unhappy that the loan deal undermined Greek sovereignty and believed that under the bailout deal, Greece’s creditors had a claim over the Bank of Greece gold reserves. As the NYTimes stated:

“Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal, and that future bonds issued will be governed by English law and in Luxembourg courts, conditions more favorable to creditors.”

According to the NYTimes, Katseli stated that:

“This is the first time ever that a European and probably an O.E.C.D. state abdicates its rights of immunity over all its assets to its lenders.

Although the NYTimes referred in its article to “the fine print of the 400-plus-page document — which Parliament members had a weekend to read and sign“, I am not sure which 400 plus page document was being referred to. I cannot find any reference to gold or gold collateral in the European Commission’s ‘Financial Assistance to Greece’ web pages, nor in the Commission’s “The Second Economic Adjustment Programme for Greece” document.

There isn’t, as far as I am aware, any collateral connection between the Bank of Greece gold reserves and the sovereign debt of the Greek State. I only say that because I can’t find the specific documentation that Katseli was referring to. However, Louka Katseli is a very credible source for making such a statement, having worked at a high level in the Greek Government, the OECD, and European Community, amongst other posts.

In comparison to the possible lack of Greek documentation, the Troika’s (ECB, IMF and European Commission) bailout deal of the Cypriot banking sector in 2013 (“The Economic Adjustment Programme for Cyprus”) did explicitly mention Cypriot gold and the possible sale of €400 million worth of gold, as follows:

27. The “programme” scenario takes into account a number of policy measures to strengthen debt sustainability, in particular (i) proceeds generated by privatisation of state-owned assets; (ii) the proceeds from the sale of excess gold reserves owned by the Republic of Cyprus;

29. Sale of excess gold reserves: It is envisaged to use the allocation of future central profits of approx. EUR 0.4 bn, subject to the principle of central bank independence and provided such profit allocation is in line with CBC rules and does not undermine the CBC duties under the Treaties and the Statute. This is estimated to generate one-off revenues to the state.

CBC is the Central Bank of Cyprus. But as the above ‘adjustment programme’ points make note of, Eurosystem central banks cannot be forced to sell their gold reserves to meet their government’s financing needs. This is due to Article 7 of the protocols on the European System of Central Banks (ESCB) and the ECB which states that the ECB and national central banks can’t seek or take direction from European Union government or institutions and, likewise, European Union governments and institutions are not allowed to influence the national central banks or the ECB.

The Central Bank of Cyprus never did sell any of its gold, but the rumours at the time, especially in April 2013, caused weakness in the gold price and were undoubtedly used by some as justification to accelerate the gold price weakness. Cyprus had, and still has, only 13.9 tonnes of gold and the sale proceeds from any Cypriot gold sale, would, like Greece, have only covered a small fraction of its bailout obligations to the Troika.

By December 2013, Reuters had released an article saying that Cyprus had “no plan to sell gold reserves to fund its €10 billion euro bailout”:

‘”We do not intend to sell the gold,’ a senior official at the central bank told Reuters, declining to be identified.”

“Asked about any alternative method to raise the 400 million euros, the official said: ‘They (the government) have to go back to the troika and say this (a gold sale) is not going to happen.'”

“While the Cypriot government had said sales would be considered, the central bank had typically been cool to the idea. The governor of the central bank would have the final say in such a sale, the central bank sources said.”

With Greek gold reserves eight times the size of those of Cyprus, any talk of Greek gold sales would be sure to have an adverse affect on the gold price. However, given that there does not seem to be any evidence that the Troika have discussed or planned for such gold sales, any suggestions of this in the media would be irresponsible.

dijsselbloem and varoufakis

Grexit and Greece’s gold claim on the ECB

In its balance sheet, the Bank of Greece also lists a claim on the European Central Bank under an item called “Claims equivalent to the transfer of foreign reserves to the ECB” (9.2).

In 1999, the founding member national central banks of the Euro (stage 3 of Economic and Monetary Union) transferred about €40 billion in foreign reserve assets to the ECB, with 85% of this total paid in US dollars and Yen and 15% paid in gold. There are now 19 European national central banks in the Euro, and Greece has a little less than a 2.8% share in the claims on this foreign reserve pool, 15% of which is in gold. The gold in this pool is managed on a decentralised basis by the member national central banks on behalf of the ECB.

In September 2011 (after the first Greek bailout [May 2010] but before the second Greek bailout [March 2012]), when fears of Greece leaving the EU were in full flight, I wrote to the ECB press office and asked them, in quite precise language, what would become of Greece’s gold contribution to the Eurozone if Greece exited from the Euro. My question to the ECB was as follows:

“In a scenario under which a Eurozone member state left the common currency zone, would the foreign reserve assets of that member state which had been contributed by that member state’s central bank to the ECB (i.e. the claims on the ECB established via Article 30 of the ESCB Statute, initially comprising 15% gold and 85% other currencies and subsequent top ups), be reimbursed to the departing members state’s central bank, or, given that a departing member state would most likely have been one to which the ECB had an outstanding loan (and so having a liability to the ECB), would the ECB seek to net the loan against the member state’s claims (made up of major currencies and gold)?”

The Communications Directorate of the ECB’s Press and Information Division promptly responded that:

Please note that there are no legal provisions for a hypothetical scenario of the kind you describe.

You may be interested in the following Legal Working Paper, although the views expressed in it do not necessarily reflect the views of the ECB:


The document that the ECB refered me to is titled Withdrawal and Expulsion from the EU and EMU – Some Reflections – by Phoebus Athanassiou, Legal Working Paper Series. No 10, December 2009.

Coincidentally, or not, Phoebus Athanassiou, the author of the paper, is Greek. According to his faculty profile at the Institute For Law And Finance (ILF) in Frankfurt, Dr Phoebus Athanassiou is “Senior Legal Counsel with the Directorate General Legal Services of the European Central Bank (ECB).”

Athanassiou also has an interesting connection to Cyprus since, according to the ILF profile, he “specialises in European Union, Greek and Cypriot financial law.” Prior to joining the ECB in 2004, Athanassiou “was in private practice, with the Athens Law Firm of Tsibanoulis & Partners, inter alia acting as consultant to the Government of the Republic of Cyprus on the transposition of the acquis in the fields of securities, banking and insurance law.” Acquis refers to Acquis communautaire, which just means the entire body of European laws (treaties, directives and regulations etc).

Athanassiou’s paper is very detailed and technical, and while there has been lots of coverage of it in the media over the last few years, the paper only discusses whether a country is allowed to exit the EU or exit EMU, not whether a departing country would get its gold back if it left EMU.

In summary, Athanassiou says in his 2009 paper:

– that before the Lisbon Treaty of 2007, there was no legal way for a member country to exit from the European Union (EU), and even though there is now (Article 50), it would be still legally problematic;

– that a member country of EMU (in the Euro) could not exit the Euro without exiting the EU;

– that “no right of withdrawal from EMU was ever intended to exist“;

– and that a member of the EU or EMU cannot be forced out because it requires the consent of all members including the member being expelled, i.e. “A Member State’s expulsion from the EU or EMU would inevitably result in an amendment of the treaties, for which the unanimous consent of all Member States is necessary under Article 48 TEU.”

Riot police stand near the euro sign in front of the European Central Bank headquarters during an anti-capitalist "Blockupy" demonstration in Frankfurt

Deal on the Table

With a Greek-Eurogroup deal now back on the table, the Athanassiou legal arguments still look to be sound. Just before the deal, there were reports of the ECB preparing for a Greek exit from the Euro. How this could even be legally undertaken is unclear. On 20th February 2015 Reuters reported that:

“The European Central Bank is preparing for the event that Greece leaves the euro zone and its staff are readying contingency plans for how the rest of the bloc could be kept intact, German news magazine Spiegel reported in a preview of its magazine.”

There is no legal way for a Euro member to exit the Euro. If it did somehow happen, a Greek exit from the Euro would have serious ramifications both financially and politically. Would the Bank of Greece also have to leave the ESCB group?

Anytime the prospect of Greece leaving the Eurozone flares up, there is always chatter that Greece would be somehow forced into selling its gold reserves.

Even though the European Central Bank Gold Agreements (CBGAs) on gold sales are supposedly not legally binding, the Bank of Greece gold holdings, worth less than €4 billion, are tiny in comparison to the colossal sovereign debts the Hellenic Republic faces, and would only make a small dent in the debt repayments.

The gold price should in theory benefit more from the financial volatility of a Grexit than it would suffer from the fear of Greek gold sales. However, the case of the feared Cypriot gold sales in 2013 shows that gold market players can use these fears to their advantage in pushing the gold price around.

If Greece stays in the Eurozone, which looks likely, it cannot independently sell its gold without the go-head of the ECB. This is because the ECB controls, or has a say in, the management of not just the gold transferred to it as part of the foreign reserve transfers of the participating national central banks, but all the monetary gold held as reserve assets by the member national central banks (under the ECB definition, reserve assets includes monetary gold).

Article 31 of the Statute of the ESCB and ECB, which addresses foreign reserve assets held by national central banks, says that beyond certain pre-existing obligations to various international organisations, “all other operations in foreign reserve assets remaining with the national central banks” are “subject to approval by the ECB in order to ensure consistency with the exchange rate and monetary policies of the Union.” So, any Euro member central bank would have to get the approval of the ECB before buying or selling any of its monetary gold.

In conclusion, Greece is not an insignificant holder of monetary gold. Its holding of 110+ tonnes makes it a reasonably sized gold holder amongst the world’s central banks. The supposed storage locations of Greece’s gold are not surprising but as to whether the gold is there and in what form the various holdings are is anyone’s guess.

Greece cannot just walk away from the Euro since such a scenario was never envisaged by the Eurocrates, and they will do whatever it takes to prevent such a scenario happening. As to whether Greece, or any Euro member, would get its gold back if it somehow managed to escape from the Euro, that is a scenario that as the ECB told me, “there are no legal provisions for.”