Germany to retrieve $36 bn of gold from US, French central banks

Germany is set to bring back gold reserves worth around $36 billion kept in the US Federal Reserve Bank and the Bank of France, the country's central bank Deutsche Bundesbank said Wednesday.

The move is part of Europe's largest economy's new reserve management strategy aimed at increasing its gold reserves kept in the bank's Frankfurt vaults to 50 per cent by 2020 from the current level of around 31 per cent.

According to Bundesbank board member Carl-Ludwig Thiele, the central bank was recalling its gold to build trust in Germany and keep the euro currency stable.

''With this new storage plan, the Bundesbank is focusing on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centres abroad within a short space of time,'' the bank said in a statement.

Thiele said the Bundesbank does not foresee another financial crisis and further stated it does not intend to become an active player in the global gold market.

"We don't see the risk of a crisis, but we see the gold. The gold serves the purpose of being flexible in case of a crisis." Thiele said.