On 4 Apr 2001, at 5:40, Bob wrote:
> The question in my mind is what does the ECB mean when they
use
> the word "backed". Does that mean that somebody can exchange
> upon demand a Euro for 15% gold and 85% non-Euro currency or
> 85% something else? If not, then I don't understand the 15%
> backing point.
Bob, The Euro is not yet a paper currency so it cannot be
converted yet. The commitment by the ECB is to have 15% of its
monetary reserves in gold. This is to insure help the stability of the
reserve. It does not imply that the Euro will be convertible into gold
and paper currencies.
Simply said, they don't put all their eggs in the same basket.
Including gold in their reserves helps stability. The international
reserve currency is the USD. Gold is sort of a mirror image of the
USD. If the USD falls, gold goes up. Holding gold as part of their
monetary reserves will help stability of the reserves.
Claude
http://www.goldcurrencies.ca
==================================
Claude Cormier Public Key
http://www.ormetal.com/PGPkey.html
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