Ecuador: Central Bank uses Gold Reserves to obtain credit abroad

EXTRA.EC (MACHINE TRANSLATED) The Central Bank of Ecuador (ECB) , through its website, confirmed yesterday afternoon that it activated a liquidity credit line that has been approved with one of its counterparts abroad for an amount of $ 200 million, month term and with an annual rate of 1.44%.

For the activation of this credit, the ECB explains, USD 200,000 troy ounces should be kept as restricted gold. For this reason there is a reduction of USD 225.9 million in the gold balance and an increase of USD 200 million in the balance of investments, term deposits and securities, accounted for in the Weekly Monetary Bulletin.

This operation, says the Central Bank, is part of the normal liquidity management carried out by the entity, in order to meet the requirements of resources both inside and outside the country. “Once the line is canceled, both the monetary gold position and the investment position, term deposits and securities will present the corresponding variations.”

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This is not the first time the ECB has used the gold reserves to obtain credit. At the end of May 2014, the ECB announced that it had invested half of its gold reserves in the international market through the US bank Goldman Sachs.

As a result of this investment, the Ministry of Finance “benefited” from a loan of USD 400 million at an annual rate of 4.3%, granted by the international bank. At the end of February this year, Ecuador’s gold returned to the ECB’s reserves.  Read Article