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Western central banks conceal their gold loans and
swaps because information about them is "highly market-sensitive"
and accountability about them would hinder secret currency market
interventions by central banks, according to a confidential report by the
International Monetary Fund obtained this week by GATA.
The report, provided to GATA by its researcher R.M.,
was written in March 1999 as the IMF staff proposed to strengthen financial
reporting standards for central banks. The report shows that the objections
by gold-lending central banks were decisive in weakening the standards. While
the first draft of the new reporting rules would have required disclosing
central bank gold loans and swaps, the revised rules, later adopted, allowed
central banks to hide their gold loans and swaps within their gold reserves
and even not to disclose the amount of their monetary gold at all, just the
value assigned to it.
That is, the explicit but secret policy of Western
central banking toward gold is to deceive and manipulate markets, as GATA
long has complained.
The confidential IMF report says that to strengthen
its financial reporting standards for central banks -- its Special Data
Dissemination Standard reserves template -- IMF staff members consulted top
officials of the organization as well as the Bank for International
Settlements, the European Central Bank, the Bank of England, the German Bundesbank, the Bank of France, and other European
central banks.
"Central bank officials," the confidential
report says, "indicated that they considered information on gold loans
and swaps to be highly market-sensitive, in view of the limited number of
participants in such transactions. Thus, they considered that the Special
Data Dissemination Standard reserves template should not require the separate
disclosure of such information but should instead treat all monetary gold
assets, including gold on loan or subject to swap agreements, as a single
data item. They also confirmed a view, taken by a number of countries (both
inside and outside the G-10) at the December board meeting that the
disclosure of the composition of reserves by individual currencies would be
market-sensitive but that they would have no objection to disclosure of such
information by groups of currencies. ..." (Page 6, Paragraph 15.)
"Conversations with a few executive directors
confirmed the reluctance of their authorities at present to disclose
information on their international reserve positions on a highly frequent and
timely basis, as a matter of policy. The motivations underlying this position
were: (a) a desire to preserve the confidentiality of foreign exchange market
intervention for a period, in order to enhance its effectiveness; b) a
reluctance by some monetary authorities to reveal information on their
official transactions in exchange markets on a more frequent and timely basis
than the disclosure of transactions by major international investors; and c)
a concern by some countries that weekly reserves data could be inherently
more volatile than monthly data, which could be misleading and potentially
destabilizing to exchange markets. This position had stimulated, during the
December board meeting, a lively discussion of the costs and benefits of
increased transparency under various circumstances and the information
requirements for well-functioning international financial markets."
(Page 8, Paragraph 20.)
Specifying changes to be made in the reporting
standards proposed by the IMF staff, the confidential report says: "On
the assets side of the template, the major changes are: a) the elimination of
any requirement to disclose the amount of gold loans, and of the explicit
requirement to disclose the volume of monetary gold. The revised template
would require only that the total value of monetary gold (including gold
loans) be disclosed." (Page 8, Paragraph 23.)
The confidential IMF report confirms and elaborates
on the Bank of England's admission to GATA a year ago that the bank's gold
swap and leasing information is "market sensitive" and its
disclosure "would allow enquirers to find out what gold transactions
have been taking place." Such knowledge of what the bank was doing in
the gold market, a spokesman for the bank said, would harm the interests of
both the British government and the bank's "private customers," to
whom the bank "owes a duty of confidentiality":
http://www.gata.org/node/10635
While disclosure of the confidential IMF report is
unlikely to prompt any acknowledgment from the most determined purveyors of
misinformation in gold market analysis and the mainstream financial news
media -- nothing is likely to get them to be truthful -- it will enable
individual investors and citizens to confront their central bank and elected
officials and ask more authoritatively for an accounting and explanation of
the purposes of secret central bank gold loans and swaps, transactions in
which even the U.S. Federal Reserve is participating, according to a
statement extracted by GATA from a member of the Fed's Board of Governors in
2009:
http://www.gata.org/node/9917
The confidential IMF report on the authorization of
secrecy for gold loans and swaps is posted in PDF format at GATA's Internet
site here:
http://www.gata.org/files/IMFGoldDataMemo--3-10-1999.pdf
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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