Schroeder vague on mechanics
of Bundesbank gold sale plan
http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=4689740 [1]
BERLIN, March 29 (Reuters) -- German Chancellor Gerhard
Schroeder reiterated on Monday support for a Bundesbank
idea to sell gold to fund research and development but was
vague on how the plan, which faces backbench opposition,
could be realised.
A finance ministry spokesman said it would be hard for the
government to draw up legislation to turn the idea into
reality until it was clear how much gold the Bundesbank
could sell -- something that might not be clear for months.
The Bundesbank has said it will seek to sell 600 tonnes of
gold under a five-year sales agreement announced by
European central banks this month.
However, the new accord does not take effect until October
and the finance ministry spokesman said this meant the
size of the Bundesbank option might be subject to further
negotiation among central banks.
"It's difficult to draw up legislation until one knows what
exactly is being sold," the spokesman said.
Bundesbank President Ernst Welteke has made any sale
conditional on a guarantee that proceeds do not flow, like
normal Bundesbank profits, into the federal budget but to
a trust-like fund, whose interest income would pay for
research.
In a speech to a Social Democrat think-tank, Schroeder
reiterated support for the idea, but was vague on how a
fund would be structured.
"I think it would be very sensible to put such proceeds
into a foundation, or whatever legal form one can find,
out of which one would fund these tasks" like research,
Schroeder said.
Setting up a foundation to manage gold sale proceeds
would require either a change in the Bundesbank law --
something that would also require approval by the
opposition-controlled upper house of parliament -- or
other secondary legislation.
However, some influential government backbenchers
have criticised the idea. Antje Hermenau, budgetary
affairs spokeswoman for the Greens, the junior coalition
partner, said last week the foundation idea could set a
dangerous precedent.
She told WDR radio that if a fund was set up to manage
research and development spending there was nothing to
stop similar funds being set up in the future covering other
areas of government expenditure, outside of parliamentary
control.
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