Senate Oks PSD’s gold repatriation draft bill. BNR will send to Parliament its position after a management sitting

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The Senate (Romanian Parliament’s upper chamber) has Okayed the Social Democrat Party’s draft bill on the repatriation of the gold reserves. The bill, initiated by PSD chairman Liviu Dragnea and senator Serban Nicolae, says that the National Bank of Romania (BNR) must bring back in Romania 91.5% of the gold deposited abroad, namely over 55 tons of gold.

The draft bill amended law no 312/2004 on the Regulations of BNR and passed by 60 votes to 29 and 16 abstentions.

The budget-finance committee with the Senate has adopted on Tuesday an admission report on the draft bill.

The bill has passed with an amendment file by Liberal senator Florin Cîţu, which introduced a deadline of 20 days under which BNR must present a report on the international reserves to the Government and to the Parliament, if there is a danger of these reserves being diminished. The report will also include the reasons of the international reserves’ cut and the BNR recommendation for the Executive.

The Liberal senator’s amendment also introduced a new paragraph to article 30 of the Law saying that „Out of its reserves, BNR can deposit gold abroad exclusively in the view of obtaining incomes. The gold deposits set up by BNR abroad cannot exceed 5% of the total quantity of gold reserves.

Wide debates have taken place around this controversial bill, contested by the BNR officials and by the Opposition parties.

Senator Florin Cîţu said the Liberals do not agree with this bill which „is directly intervening in the way the monetary policy is enforced in Romania”.

In his turn, PMP senator Traian Basescu, former President of Romania, told the  Senate’s plenary session that the bill „is a huge mistake”, as, in case of crisis, “Romania will be looking for the back door to run with the gold in London in order to prove it exists.”

On the other side, one of the arguments in favor of the bill is that Romania has been keeping a great part of its gold reserves at the Bank of England for 10 years and is not getting any interests, and, on the contrary, it is paying a rent for deposit.

At present, Romania has gold reserves of almost 104 tons, with almost 60% of them being deposited in the UK.

BNR will send to Parliament its position after a management sitting

National Bank Governor Mugur Isarescu said on Tuesday a management sitting will take place and the BNR position will be then sent to the Parliament.

“Let’s see the final form of the law on gold repatriation. Our opinion will be professional and with our commitment to maintain Romania’s credibility. I believe there is no need for a law in this regard,” Isarescu said.

“We’ll try to explain as good as possible what the gold reserve means, because many discussions have been carried out besides the subject. The reserve is not an investment. The reserves cut down the financing costs and bring more advantages than the repatriation,” the BNR Governor said.

He added that more gains could have been achieved, but BNR does not conduct speculative operations with the country’s reserve.

Asked about the new reference to replace ROBOR Index, according to GEO 114/2018, Isarescu said the new interests could reach the credit level (3.5%) and has recommended the banks to increase interests for deposits.

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