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ECB urges Romania to consult it on law on repatriating BNR-managed gold reserves

ECB urges Romania to consult it on law on repatriating BNR-managed gold reserves Romania FX reserves

BUCHAREST (Romania), May 16 (SeeNews) - The European Central Bank (ECB) said it has asked the Romanian authorities to consult it on legislation concerning the country's central bank, BNR, such as the bill requiring BNR to repatriate gold reserves held abroad.

National authorities are required to consult the ECB on draft legislative provisions concerning matters that fall within its competence, including legislative provisions concerning national central banks, Yves Mersch, member of ECB's executive board, said in a letter to the president of Romania's Chamber of Deputies Liviu Dragnea, who is also leader of the governing Social Democrat Party (PSD).

The ECB noted that it was consulted in the past by the Romanian authorities on legislative proposals affecting the manner in which BNR manages foreign reserve assets. More specifically, it noted that the recently adopted amendments to the law on BNR related to the gold reserves managed by BNR affect the manner in which Romania's central bank must exercise its competence to manage the gold reserves as foreign reserve assets.

"The ECB would appreciate the Romanian authorities giving due consideration to the above observations by honouring their obligation to consult the ECB in future, in particular in the event of further legislative work in relation to the Law [on repatriating gold reserves]," Mersch said in the letter dated May 13 and published on the ECB's website.

Last month, the Chamber of Deputies, the lower chamber of Romania's parliament, passed amendments to the law on BNR bill that would require the central bank to repatriate its gold reserves held abroad. Liviu Dragnea and senator Serban Nicolae drafted the bill in February. BNR warned at the time that ECB should give the green light to the plan before it moves forth.

"The National Bank of Romania can deposit gold from the established reserve abroad exclusively for the purpose of obtaining income through trading and other specific operations. The gold deposited abroad by the National Bank of Romania can not exceed 5% of the total gold reserve," the amendment reads.

According to the explanatory statement accompanying the draft law, nothing in Romania's current economic situation justifies keeping such amount of gold as a reserve abroad, with all related high costs, provided that this reserve can be properly maintained and supplemented in domestic deposits.

The gold reserves managed by the central bank remained unchanged at 103.7 tonnes and were worth 3.820 billion euro ($4.279) at current international prices at the end of April, according to the latest data available.

According to Romanian media reports, some 61 tonnes of BNR's gold reserves are being held at the Bank of England.

($=0.8927 euro)