With Italy looking increasingly financially wobbly, European leaders know that more firepower is needed to safeguard the euro. The big question is: Where should it come from?
German Economy Minister Philipp Rösler on Monday insisted that Germany's gold reserves at the central bank were off limits. He declared German gold reserves "untouchable," adding his voice to German opposition to the idea of using reserves to boost euro zone rescue funds.
The German central bank, the Bundesbank, and a spokesman for Chancellor Angela Merkel have already rejected the idea which German media said was discussed at last week's summit of Group of 20 leading economies in Cannes.
Reports in the Welt am Sonntag and Frankfurter Allgemeine Sonntagszeitung newspapers said Paris, London and Washington had urged Merkel to permit the use of central bank reserves, including special drawing rights from the International Monetary Fund and gold, to bolster the rescue fund by 50 to 60 billion, of which some 15 billion would come from Germany.
Most German editorialists say that Germany is right to protect its central bank reserves despite the need for an expanded rescue fund.
The conservative Frankfurter Allgemeine Zeitung writes:
"Behind a seemingly technical process, this is a grab for German reserves. Seeing as the Bundesbank invested the lion's share of the money earned by Germans over decades in gold, this is, at the end of the day, our gold".
"As a last resort Europe's euro rescuers start printing money. By reaching out for the Bundesbank's gold, the bid to seize forbidden state finances is happening via the central bank. This move could prompt massive inflation."
The Financial Times Deutschland writes:
"By accessing the special drawing rights of the Bundesbank and the other national central banks, the rescue fund could be expanded. That may soon be necessary because sufficient financial firepower will be needed to convince investors that the euro nations will do everything they can to save their common currency. But plans which contravene German national law are the wrong approach to take."
"The survival of the euro zone is a question of political will. German Chancellor Angela Merkel has to make clear that it is completely in Germany's interest to secure the euro's future -- even if many billions more have to be paid for rescue loans and guarantees."
The conservative Die Welt writes:
"Angela Merkel is preparing Germans to expect at least another decade of euro misery. The attack on the Bundesbank, which appears to have been rebuffed for now, should not be seen as the last unreasonable demand in the pipeline. There will inevitably be victims of the crisis. But every nation has a core of values which they will not sacrifice. Germans, more than their neighbors, are steered by their fear of inflation. The Bundesbank's reserves, regardless of whether they are gold, currencies or special drawing rights, are therefore of great psychological value. Whoever oversteps the line, risks protests in the donor countries which could equal the ferocity of those of the indebted counties."
The left-leaning Frankfurter Rundschau writes:
"Is this an attack on the independence of the Bundesbank, or even 'our' gold? No, it's not."
"Firstly, the independence of the Bundesbank does not extend beyond the ECB, which, alongside several central banks, supports the proposal. Therefore it is a dispute within the independent euro-system. Secondly, central banks' independence extends to monetary policy, but not to managing national wealth. And thirdly, this is not about gold, but rather special drawing rights, the IMF's special currency which can be exchanged into dollars and euros."
"The worrying part of the proposal is that the whole world fears that the euro rescue package may be too small to avert catastrophe. The worries would be unfounded if the ECB could buy unlimited government bonds. However, they can't do that because the German government is against it and because the Bundesbank is fighting this pragmatic solution. It is increasingly clear that the real problem hampering the euro rescue is the Bundesbank's obstructive policies."