Bonn Backs Down Over Gold Reserve Revaluation

Tietmeyer agreed that the gold could be revalued this year. But the government, in a crucial concession, accepted that the transfer of the proceeds to Bonn from the resulting capital gain would only take place in 1998, in line with the Bundesbanks normal accounting practices.

This means Waigel will no longer be able to count the proceeds of a gold revaluation towards meeting, in 1997, the criteria for economic and monetary union laid down in the 1992 Maastricht treaty. The government will have to resort to other measures to reduce its deficits.

Although the agreement still needs the approval of the Bundesbanks decision-making central council, Waigels climbdown should take the sting out of the dispute which has highlighted Germanys financial problems and cast doubt on the future of the euro, the planned single European currency. After the minister met MPs, Wolfgang Sch