Frankfurt Letter, week beginning Feb. 13
-Why did Germany transfer tonnes of gold?
In 2016, 216 tonnes of gold were transferred to Frankfurt from storage locations abroad: 111 tonnes from New York and 105 tonnes from Paris.
"The transfer of gold from New York was completed successfully last year," said Carl-Ludwig Thiele, member of the Bundesbank’s executive board at a press conference in Frankfurt.
“The gold storage plan for New York, which envisaged the transfer of 300 tonnes of gold from New York to Frankfurt, was fully realized in 2016.” Thiele stated.
Thiele said there would not be any further transfers from New York and Donald Trump's presidency would not change the situation.
During the Cold War, West Germany moved large amounts of its reserves abroad out of fear an invading Soviet army would seize these. Even after the Berlin Wall fell in 1989, the gold remained overseas.
-Why has gold been returned?
Now times have changed and Germans are no longer worried about preventing their gold reserves from falling under Soviet control. In addition, the central bank no longer needs to keep gold in Paris as a protective measure in an emergency situation, which would allow for the quick exchange of international currency as both countries use the euro.
Germany has been bringing gold home from New York and Paris since 2013 under the gold transfer program in which 642 tonnes have already been transferred.
Once the transfers are completed, Frankfurt will hold half of Germany's 3,378 tonnes of reserve gold, with the remainder staying in New York and London.
- Last week's highlights
The sentix headline index for the Eurozone experienced a slight setback in February (-0.8 points). In contrast, the current value has increased 4 points and has reached its highest value since May 2011.
According to Sentix, investors’ expectations have retreated for all the world’s regions as the new U.S. president’s first measures have resulted in caution among the investment community. Experts are positively reviewing the current situation, but in comparison to other world regions, the U.S.’s economic expectations have fallen the most in February.
- United Arab Emirates and Germany cooperate on energy policy
State Secretary at the Federal Ministry for Economic Affairs and Energy of the Federal Republic of Germany, Rainer Baake, and Minister of Energy of United Arab Emirates (UAE), Suhail Mohamed Faraj Al Mazrouei have signed a Joint Declaration of Intent on cooperation in the fields of energy.
The official signing took place during the World Future Energy Summit in Abu Dhabi, and was followed by the first meeting of the High Level Steering Group, which adopted a work program for the first year of the energy partnership.
It includes scientific exchange, governmental and expert workshops, industry meetings and mutual delegation visits.
To strengthen cooperation in the energy sector between the two countries, Germany and the UAE will cooperate on issues such as frameworks for renewable energy technologies, energy efficiency, the development of the electricity market and research and development.
-The week ahead
This week the important data in the Eurozone includes flash estimate European Union and Euro area GDP for the fourth quarter of 2016, international trade in goods, production in construction and industrial production data.
The Brexit process and the impact of Trump’s policies will also be closely watched.