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German central bank denies its chief to quit over gold revaluation plan

May 28, 1997

BONN, Germany (AP) _ The central bank said Wednesday its president does not intend to resign over the government’s disputed plan to revalue gold reserves to qualify for the single European currency.

The newspaper Frankfurter Rundschau reported that Bundesbank president Hans Tietmeyer has warned the government against the revaluation plan.

A rumor spread through currency markets that Tietmeyer would resign, causing the dollar to make slight gains against the German currency, the mark.

But central bank spokesman Manfred Koerber said, ``This rumor is without any substance.″

Finance Minister Theo Waigel has proposed that the book value of the gold reserves be increase to create new revenues for the government as it rushes to meet rigid fiscal criteria for taking part in the European Union’s single currency, which is to be launched in 1999.

Because of a large public debt and new holes in the government’s budget, doubts have arisen over whether Germany will be able to meet single-currency ceilings on debt and deficits.

Germany’s gold reserves have a book value of 17 billion marks ($10 billion) but a market value of 57 billion marks ($33.5 billion). Waigel wants to increase the book value and transfer the profit to government coffers.

Tietmeyer has told a parliamentary budget committee that the reserves’ book value should not be increased while EU countries are trying to meet the single-currency criteria, the Frankfurter Rundschau reported, citing a committee meeting transcript. The central bank controls the nation’s gold reserves.

A revaluation should be avoided ``in the sensitive period before currency union,″ the newspaper reported Tietmeyer as telling the committee.

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