Bundesbank board against gold sale plan

Proposals by Bundesbank President Ernst Welteke to use sales from the German central bank's gold reserves to fund education projects have hit opposition in both the Bundesbank and the finance ministry, Der Spiegel reported.
Chancellor Gerhard Schroeder has set education, research and innovation as priorities this year, following the welfare reform and tax cut programme passed in 2003.
Der Spiegel said five out of the eight Bundesbank board members were against the idea of using gold sales to create a special education fund, saying it was the government's responsibility to pay for education, not the central bank's.
In addition, they see adequate reserves as important instruments to keep for possible interventions on the foreign exchange market to deter currency speculators, the magazine said.
Bundesbank sources told Reuters the board wanted to secure an option allowing it to sell up to 400 tonnes of gold over the next five years but had not yet reached agreement about what to do with the proceeds of any sale.
Welteke said last week that no decision had been taken on whether Germany would sell gold but it wanted the option to do so if required.
As well as the Bundesbank board, Der Spiegel said Finance Minister Hans Eichel was also against the idea of devoting the proceeds of gold sales for education purposes, a move that would require a change to the law that covers the Bundesbank.
Instead, finance ministry officials would prefer to see any revenue from gold sales added to Bundesbank profits, where it would be available for the general budget, the magazine said.
Welteke floated the idea of using the part of the Bundesbank gold reserves to fund education spending last year but the government has not formally settled funding plans for its current education initiative. "The discussion is still going on," an education ministry spokeswoman said.
European central banks are expected this year to renew a gold sale agreement that expires in September that for five years has specified the amount of gold each bank can sell.