16
May
Gold will protect ECB from defaults, says top economist
16 May 2011 The Sunday Business Post
The European Central Bank (ECB) should be able to withstand a hit on its asset values from a Greek, Irish or Portuguese default because of the enormous gains in the value of gold held by euro zone central banks, according to atop economist at Switzerland’s biggest bank.
In an article in the monthly bulletin of the Official Monetary and Financial Institutions Forum, UBS chief European economist Stephane Deo said the ECB could protect its capital solvency by setting last year’s €100 billion gain in its gold assets against any writedowns on its sovereign bond holdings or emergency bank lending.
Euro zone central banks have gold holdings of 345 million troy ounces, which was worth more than €367 billion at last week’s prices.
