s own wealth to other purposes than monetary policy. secondly, our balance sheet shows clearly that any transfer of the revaluation gain or part thereof cannot take place in swiss francs or in foreign exchange. our domestic assets are too low and a transfer of foreign reserves would have a negative impact on the bank ’ s operations : • • the snb would be impeded in conducting its monetary operations ( interventions, money market operations ) the bank ’ s profitability and liquidity would diminish drastically. consequently, a transfer in gold of a part of the valuation gain is the obvious solution. a group of experts has been asked to make an estimate of the excess reserve of the bank. 2. 2 the proposals the group of experts has come to the conclusion that a capital corresponding to 1300 tonnes of gold could be withdrawn from the snb ’ s balance sheet to be used for other purposes than monetary policy. of these 1300 tonnes, 500 tonnes are to be set aside for financing the swiss foundation for solidarity previously announced. what to do with the remaining 800 tonnes? a first idea would consist in transferring the remaining excess reserves to a public investment fund having more extensive investment possibilities than the snb. currently, our asset management policy is basically limited to fixed - income investments. the fund ’ s regulations should provide for investment in shares in order to achieve a higher long - term yield. but there is usually no limit to the imagination of politicians when money is to be distributed! other concrete proposals exist. some would like the excess gold reserves to be earmarked for specific goals such as improving the capitalisation of our social security schemes or for educational purposes. but regardless of the projects, the aim is always to transfer our excess reserves outside the snb in order to manage them more effectively than within the central bank and its relatively restrictive framework. on our side, we are not keen about the idea of being in charge of managing a large reserve portfolio. we do not wish to wear two hats, one as central bank in charge of monetary policy and that of asset manager for the country. we could run the risk of being caught in the crossfire of criticism when it comes to executing a mandate which is not a part of our basic responsibility. one way or another, the transfer of excess reserves by the snb to one or several outside entities is not just a simple accounting problem. even though the national bank is independent it does not have the legal power to dispose of a part of its own resources for other purpose

outset that the initial contribution to the foundation would be in the form of a 500 tonnes gold donation by the snb. it thus became fully clear that switzerland was going to demonetise gold and to progressively transform a part of its stock into interest bearing assets. but why did we decide to fund the foundation with gold and not with other assets? in order to understand this, one must take a closer look at the structure of the snb ’ s balance sheet. 2. from revaluation of the gold stock to gold sales 2. 1. the snb ’ s balance sheet if, in relative terms, switzerland is leading among all industrialised countries as far as gold holdings are concerned, the swiss national bank is also a special case with respect to the structure of its balance sheet. the bulk of the snb ’ s assets consist of foreign exchange and gold. swiss franc denominated assets constitute a mere 20 % of the total. compared to the balance sheets of the bundesbank prior to the introduction of the euro, the snb ’ s balance sheet exhibits only a small proportion of domestic assets ( see graph 3 ). graph 3 assets structure of the bundesbank and the swiss national bank 20 % 54 % 50 % 30 % 30 % 14 % buba gold snb foreign claims domestic claims other assets on the liabilities side, the most striking feature are the bank ’ s own capital and reserves to which will be added the revaluation gain on the gold stock ( see graph 4 ). graph 4 simplified balance sheet of snb as of 31th december 1998 in billion dollars with gold at market price assets liabilities gold holdings & claims on gold claims in foreign currencies claims in swiss francs total monetary base liabilities towards the confederation gold provision capital, reserve & provisions total two arguments justify a transfer of gold reserves : firstly, the existence of considerable capital resources within the snb balance sheet shows that we are endowed with more reserve assets than necessary from a monetary point of view. there is no example of a central bank of a g10 country with such a proportion of capital and undistributed profits in its balance sheet ( see graph 5 ). graph 5 estimate of g10 central banks ’ net wealth in proportion of gdp united states germany france i taly switzerland netherlands japan united kingdom belgium sweden canada 0 % 5 % 10 % 15 % 20 % the question therefore naturally arises whether the moment has not come to allocate a part of the bank ’