Relevant:
- Germany: "We'll Give you Eurobonds... As A Title Pawn On Your Gold"
- Currency War: Germany about to lose 66% of its gold reserves
- Beppe Grillo calls for nationalisation of Italian banks and exit from euro
- Belgian Central Bank Says 10% of Gold Reserves on Loan; Will Reign In
- Germany Continues Repatriation of Gold Reserves From Abroad
2012-06-09 — theglobeandmail.com
Germany's idea is coyly named the European Redemption Pact and it is nothing if not creative... Countries using the scheme (most would, including Germany, because of generally high debt-to-GDP ratios) would have to cover 20 per cent of their debt with collateral, payable in gold or currency reserves. Default on the payments and you lose your gold. The "sinking" fund would retire the debt over 20 years.
Italy set the precedent in the 1970s, when it was in the midst of one of its blandly regular financing crises and resorted to a gold-backed loan. The loan was quickly paid off, because there was so much political pressure to do so.
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