July 3, 2013, 2:45 PM
Gold’s Slump Dings European Central Bank’s Balance Sheet
By Todd Buell
The slump in gold prices has hit the European Central Bank where it hurts: its balance sheet.
The consolidated balance sheet of the ECB and its 17 member central banks plunged at the end of last week as a result of a revaluation of gold prices, data provided by the ECB showed Wednesday.
The regular quarterly revaluation meant that the Eurosystem’s gold holdings fell 115 billion euros ($149.5 billion dollars). Gold prices fell by nearly 25% in dollar terms in the second quarter. In euro terms, the ECB used a price of EUR919.9 per fine ounce in its revaluation.
As a result, figures published by the ECB showed that balance sheet declined by EUR122.89 billion to EUR2.43 trillion, its lowest level since November 2011. It’s down about 18% so far this year, largely due to early repayments of three-year loans the ECB extended to banks in 2011 and 2012.
The ECB’s gold losses (or profits) don’t affect its ability to conduct monetary policy or extend loans to Banks. But given that it’s a big gold holder, price fluctuations can lead to big changes in its balance sheet, as Wednesday’s data showed.
According to the Federal Reserve’s balance sheet, the U.S. central bank has about $11 billion in gold. Even after the recent revaluation, the ECB is still sitting on over $400 billion in bling.
The consolidated balance sheet of the ECB and its 17 member central banks plunged at the end of last week as a result of a revaluation of gold prices, data provided by the ECB showed Wednesday.
The regular quarterly revaluation meant that the Eurosystem’s gold holdings fell 115 billion euros ($149.5 billion dollars). Gold prices fell by nearly 25% in dollar terms in the second quarter. In euro terms, the ECB used a price of EUR919.9 per fine ounce in its revaluation.
As a result, figures published by the ECB showed that balance sheet declined by EUR122.89 billion to EUR2.43 trillion, its lowest level since November 2011. It’s down about 18% so far this year, largely due to early repayments of three-year loans the ECB extended to banks in 2011 and 2012.
The ECB’s gold losses (or profits) don’t affect its ability to conduct monetary policy or extend loans to Banks. But given that it’s a big gold holder, price fluctuations can lead to big changes in its balance sheet, as Wednesday’s data showed.
According to the Federal Reserve’s balance sheet, the U.S. central bank has about $11 billion in gold. Even after the recent revaluation, the ECB is still sitting on over $400 billion in bling.
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