DUBAI, 22 September 2003 — Dutch Central Bank Governor Nout Wellink said yesterday that a new deal covering the sale of central bank gold was discussed briefly during an IMF meeting here, but would only be tackled properly early next year.

“We had a brief discussion on gold...We will come back to this issue at the beginning of next year,” Wellink told Reuters in an interview after attending a G-10 meeting of rich nations. The old deal, limiting central bank gold sales to 400 tons a year for five years struck on the sidelines of the 1999 autumn meeting of the IMF in Washington, expires in September 2004.

“Don’t expect a fundamental change in the approach of the central banks... We will be transparent again, there will be no fundamental break in our approach,” he said.

Weeks of speculation about the fate of the Washington accord, known formerly as the Central Bank Gold Agreement, have helped to push bullion to a 6-1/2-year peak. Spot prices were trading around $381 a troy ounce on Friday afternoon.

A London Bullion Market Association (LBMA) survey of gold market players published last week said that a rise in central bank gold sales to an average of 484 tons a year could be easily absorbed, thanks to the buoyant gold price.

But Wellink said that it was premature to try and put even ball-park figures on how much gold might be heading toward the market, although clearly numbers were getting thrown around. “There are no concrete details at this moment ... there are always numbers in the air, but we didn’t become specific.” The G-10 met this morning. Its members are the United States, Britain, France, Germany, Italy, Japan, Canada, Belgium, the Netherlands, Sweden and Switzerland, making 11 in total.

On the other hand the Dutch central bank, which has already sold 1,000 tons of gold and has 700 tons remaining, is clearly interested in selling some more, pending a new agreement with the Dutch government on how to treat the proceeds.

“We have sold more than 50 percent (of reserves) which is a signal of how we see gold,” said Wellink. The Dutch have raised around 10 billion euros from gold sales.

“Gold is the property of the central bank and the decision to sell the gold is a decision of the central bank...we will only sell gold if the government agrees that we can keep the proceeds, but there is still something in it for him.” Under the existing agreement between the bank and the government, part of the proceeds from the gold sales were kept by the bank, invested in yield-bearing instruments and 95 percent of this ‘dividend’ went to the government.

“This is a profit for the ministry and for the nation as a whole,” Wellink said.

Meanwhile, Russia would like to increase the percentage of foreign exchange reserves it holds in gold but it is not in a position to do any buying at the moment, first deputy governor of the central bank said yesterday.

Oleg Vyugin also said the central bank cannot move to a more flexible currency regime until an oil stabilization fund has been set up by the government.

“Our gold reserves ... are around seven to eight percent of our total international reserves and actually we think that we have to get at least 10 percent of international reserves,” Vyugin told Reuters on the sidelines of a conference in Dubai.

“We are not in a position to buy at the moment but generally we would like to increase (the gold) ... At this moment we are limited because we also have to manage monetary policy.”

The central bank said last week that Russia’s gold and foreign exchange reserves rose to $62.1 billion from $62.0 billion as of Sept. 12.

Vyugin also said that for the moment, Russia’s exchange rate regime was flexible enough. Last week the International Monetary Fund said Russia needed a more flexible exchange rate system.

“Of course our target is a floating exchange rate finally but still we’re not in a position to cancel the managed approach because we are waiting for the (oil) stabilization fund to be effective,” he said. “It will be some sort of guarantee that the correlation between the oil price and the foreign exchange rate will be easier.”

The proposed fund would allow Russia, an oil exporter, to save income from oil revenues when crude prices are high to be used when oil revenues fall.