Romania's parliament has approved legislation to bring back the country’s gold reserves, but the national bank opposes the move.
Romania’s parliament has approved legislation to repatriate the country’s foreign gold reserves.
The new law requires the return of 91.5% of Romania’s gold held overseas — equivalent to about 56 tonnes of the precious metal. Much of it is currently kept in Bank of England vaults.
The gold has become a bone of contention between the ruling Social Democrat Party (PSD) and top officials in Romania’s National Bank.
Why are Romania's gold reserves controversial?
Ruling party boss, Liviu Dragnea, claims that keeping the country’s gold abroad is no longer necessary because Romania has been enjoying a stable economy with moderate inflation that no longer warrants paying high fees to the Bank of England for storing the reserves.
“Nothing of Romania’s current situation can justify maintaining such quantity of gold abroad when it may very well be stored inside the country”, the draft bill said.
The Social Democrats point to countries such as Germany, Hungary, Italy, Austria that have moved their precious metal closer to home.
However, opponents of the move say that repatriating the gold would endanger the country’s economy by limiting the government’s ability to borrow from foreign markets.
“The reserve is something you keep safe for extraordinary circumstances, for the country’s credibility, Mugur Isarescu, Governor of the National Bank of Romania, said in a press statement. “The reserve reduces the cost of borrowing and brings other advantages. We [the National Bank] do not intend to lose Romania’s gold on slot machines.”
The view was echoed by other financial experts and opposition politicians who are contesting the bill at the country’s Constitutional Court.
“This is a risky move given Romania’s political and economic instability. Keeping the gold abroad serves as a guarantee for foreign lenders that Romania will pay its debts”, Gheorghe Ialomiteanu, a former finance minister, told local media.
Iulian Fota, a former presidential adviser on national security, told Euronews: "The move to repatriate gold is driven by nationalism and anti-Western sentiment that aims to reduce ties with the Western world."
Social media users spared no time in poking fun at Dragnea’s foreign reserve proposals.
He was lampooned with gold teeth, excessive jewellery and was even depicted commissioning a golden statue of himself as users speculated how would use the precious metal.