Figure of the month: 3,381

As of 31 December 2015, the gold reserves of Bundesbank – the German Federal Bank – had a fine weight of 3,381 tonnes, equalling 109,021,003 troy ounces of gold. On this date, the German gold reserves had a value of €107,405 million. As in the decades before, the German gold reserves have taken second place in the ranking of countries and organizations with the largest gold reserves. Only the US have maintained even larger gold holdings, amounting to 8133.5 tonnes. The third position in this ranking is taken by the International Monetary Fund with 2,814 tonnes, followed by countries such as Italy (2451.8 tonnes), France (2435.4 tonnes) and the People's Republic of China (1658.1 tonnes).

Compared to other countries the gold holdings in Germany seem significantly larger, which cannot be explained solely by the economic strength of the country, as would be the case with the US. Rather, the reason for this can be found back in the 1950s, when the German gold reserves were accumulated as a means to balance the huge current-account surpluses Germany built up towards countries in the dollar area and in the former European Payments Union. These compensations, in the form of gold deposits, remained where they were credited: in New York, London and Paris. In addition to practical considerations, this decision was a result of the fear of an escalation of the cold war which prevailed until the 1980s. Since then much has changed, especially the gold reserves in Paris have lost their raison d'être following the introduction of the euro. Therefore, the Bundesbank has begun to "relocate" not only all German gold reserves from Paris to Germany over the next four years, but also certain amounts from London and New York: by 2020, half of the German gold reserves will be stored in Frankfurt, while 37 per cent will remain at the US Federal Reserve Bank FED and 13 per cent at the Bank of England.

Arnulf Hinkel
Financial journalist