international reserves of the national bank of romania 1920-1944

IINNTTEERRNNAATTIIOONNAALL RREESSEERRVVEESS OOFF TTHHEE NNAATTIIOONNAALL BBAANNKK OOFF RROOMMAANNIIAA 11992200--11994444

Note

This paper was prepared, under the co-ordination of Professor George Virgil Stoenescu, Ph.D., by Elisabeta Blejan – Statistics Department,

Brînduşa Costache – Secretariat Department, Adriana Iarovici – Research and Publications Department

Contents 1. National monetary system and the international reserves

of the issuing bank........................................................................... 3

2. The 1920-1928 period .................................................................... 4

3. The Great Depression and the economic upturn (1929-1938) ....... 8

4. National Bank of Romania’s international reserves during wartime (1939-1944) ............................................................. 12

5. Conclusions .................................................................................... 15

References .......................................................................................... 16

Annexes

3

1. National monetary system and the international reserves of the issuing bank

The concept of international reserves has evolved through time, changing with the economic and historical context. At present, according to professional literature, the international reserves include the total of external claims (monetary gold, special drawing rights, the reserve position in the IMF, convertible currencies, other assets) controlled by monetary authorities for regulating the possible balance of payments imbalances and ensuring full servicing of the external debt. International reserves represent a guarantee for the country’s external solvency as well.

Originally, international reserves consisted of the metal stock held with the issuing banks. The metal stock or the total cover comprised the gold and silver stock, to which the currencies convertible in precious metals were added thereafter. The Monetary Law set the value of the total cover in a fixed proportion against the nominal value of banknotes in circulation or sight commitments. Apart from its being used as collateral for the banknotes in circulation and for their conversion into gold, the total cover could also serve to set off debts owed to other countries whenever they could not be extinguished via delivery of goods or provision of services.

In view of all these facts, in order to examine the development of the composition and the contents of the total cover, it is necessary to make a brief overview of the history of the Romanian monetary system.

The law of 1867 on establishing the monetary system and manufacturing the national currency required the national currency be based on the bimetallic gold-silver standard. Thus, one leu was equivalent to 0.3226 grams of gold with fineness of 900‰ or 5 grams of silver with fineness of 835‰. In 1880, upon establishment, the National Bank of Romania was required by law to hold a total cover accounting for one third of the sum of the banknotes issued, yet the proportion between gold and silver was not specified.

The introduction of the gold-silver standard and the putting of one Romanian leu (plural: lei) on a par with one French franc were aimed at bringing the Romanian monetary system into line with the monetary systems promoted by the Latin Union member states. This was yet another sign that the Romanian society strove to move ahead along the lines of the French society in an effort to integrate into the pattern of the European society of the time. Unfortunately, Romania’s application for membership in the Latin Union was rejected and eventually, given the economic climate, the country had to give up the bimetallic standard.

The Monetary Law enacted in 1892 stipulated the introduction of the monometallic gold standard. Accordingly, one leu was equivalent to 0.3226 grams of gold with fineness of 900‰. The exchange rates against the major currencies were as follows: 1 French franc = 1 leu, 1 Swiss franc = 1 leu, 1 pound sterling = 25.25 lei, and 1 US dollar = 5.18 lei. The said Law and the NBR Statute set forth a gold cover of the banknotes in circulation of at least to 40%. In exceptional cases, the cover could drop to 33%, of which 30% should include bills of exchange denominated in pound sterling, French franc, Belgian franc and German mark.

4

2. The 1920-1928 period

World War I took a heavy toll on Romania’s economy, as the efforts to support the war and to achieve the Grand Union by incorporating the territories inhabited by Romanians in Russia (Bessarabia) and Austria-Hungary (Transylvania, Banat, Bukovina) resulted in the depletion of the central bank’s international reserves. During the 1920s, the Romanian authorities strove to replenish the reserves and implicitly to add fresh lustre to the prestige of the domestic currency. To this end, the resources of the new territories that became part of Romania proved more than enough.

During the war, the Romanian government took several loans from the central bank, thus helping boost the currency issue and stoking up inflation. In order to ensure the legal cover, the Ministry of Finance offered the National Bank of Romania the gold and foreign currency held with banks abroad, and later on, when those funds had been used up, they were replaced by Gold Treasury Bonds. The issuing house was empowered, through repeated agreements concluded between the National Bank of Romania and the government, to incorporate these bonds into its cover stock, which caused the domestic currency to depreciate further.

The circumstances surrounding the warfare prompted the National Bank of Romania to accept, in December 1916, to send to Moscow its metal stock worth lei 315.2 million, which could no longer be recovered. All this led to the formal suspension of gold convertibility of the leu starting June 1917.

Even after WWI was over, the government continued to take large-value borrowings from the issuing bank in order to cover budget expenditures and obtain the amounts needed to achieve the monetary unification. During 1916-1918, by withdrawing from circulation the Russian roubles, the Austro-Hungarian crowns and the lei notes printed by the Romanian General Bank with the consent of the German occupation army in Bucharest, the government succeeded in accomplishing the monetary unification.

Further on, the Romanian authorities focused on the turnaround of the economy and resumption of foreign trade. As from 1922, the government committed itself to taking out no more loans and to financing the budget from current revenues alone, a commitment it could never fulfil. Following the implementation of economic measures, the national currency was stabilised de facto, albeit at levels lower than pre-war values.

5

Gold Treasury Bonds and International Reserves, 1920-1928

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Gold Treasury BondsInternational Reserves

Moreover, considering as absolutely necessary the return to convertibility of the leu at some point in the future, the decision was made to assist the National Bank of Romania in increasing its metal stock. Thus, in February 1922, the Ministry of Finance offered the National Bank of Romania part of the gold obtained after the liquidation of Austro-Hungarian Bank and received by Romania as compensation for war damages.

Gold Reserves, 1920-1928

020406080

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Gold in deposits abroad Gold in domestic deposits

6

The next step was taken in 1925, when the government and the National Bank of Romania concluded some agreements aimed at putting an end to the issue on account of the debts incurred by the government with the central bank and at taking measures to cover money circulation. According to these agreements, the National Bank of Romania was vested with the power to consider as cover for the guarantee of its issue the following: gold in vault (coins, bullions), gold in deposits with the Bank of England, the Reichsbank in Berlin, and in Moscow, the entries in the English Treasury Book, rents, bills of exchange and compensations in gold. The government was to set up a fund to wipe off the debts to the National Bank of Romania, thereby considering the opportunity to withdraw the banknotes issued for the government and to limit the NBR issue to the level recorded at end-1924.

Gold Reserves Abroad, 1920-1928

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Moscow Berlin London

The NBR Statute of 1925 provided for a metal stock of at least 40% of the banknotes issued; in exceptional cases this proportion could be lowered to 33%. Out of the metal stock, one third could be accounted for by gold bills of exchange on the markets in France, Belgium, Germany, the United Kingdom and the USA. This percentage could be raised to 50% of the metal stock, including also Romanian rents paid in foreign currency.

Given the circumstances and unless the Gold Treasury Bonds and the gold in Moscow are taken into account, it may be asserted that the NBR international reserves witnessed a decline at the start of the 1920s. Nevertheless, a few years later, after the recovery of part of the precious metal deposited with foreign banks, the rebound in economic activity and the purchases of gold from domestic mines, the National Bank of Romania succeeded in replenishing, at least in part, its international reserves. In 1928, gold and foreign currency holdings in Berlin were liquidated following the agreement concluded between the National Bank of Romania and the Ministry of Finance. As a result, the international reserves posted a marked decrease.

7

International Reserves (except for Gold Treasury Bonds and the gold in Moscow), 1920-1928

0

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lei million

Throughout this period, the National Bank of Romania maintained on its metal stock records the gold in Moscow, although it had been seized by the Soviet authorities. The monetary issue was thus assigned a fictitious cover, which made impossible, among others, the return to the convertibility of the leu. Consequently, the national currency saw a massive devaluation which pushed up domestic prices and caused the leu to lose ground versus the major currencies.

International Reserves, 1920-1928

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lei million

Gold Foreign exchange on stock

8

3. The Great Depression and the economic upturn (1929-1938)

For most of the 1930s, sweeping changes afflicted the world economy. From a monetary viewpoint, the replacement of the gold standard by the gold exchange standard was a step closer to the present composition of international reserves.

The Great Depression (1929-1933) caused a change in the role of gold reserves which ceased to represent reserves for both the domestic circulation of money and the exchange of banknotes. Owing to the phenomena typical of a depression, the importance of the gold stock as universal money increased considerably. In addition, the international reserves of the National Bank of Romania came to encompass not only the gold stock and the foreign currencies in the metal stock, but also the foreign currencies outside the stock (holdings in foreign currencies in foreign accounts, as well as the commercial paper expressed in foreign currencies).


0

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lei million

Gold Foreign exchange

The features of the 1929-1938 period should be explained. The Monetary Law of 7 February 1929, focusing on the return to convertibility of the leu, set forth the replacement of the gold standard by the gold exchange standard and the devaluation of the national currency. In 1929, the leu was the equivalent of 10 milligrams of gold with fineness 9/10 compared to 0.3226 grams of gold in 1890. The National Bank of Romania’s sight commitments had to be covered in a proportion of at least 35%. 25% of them were to be covered by gold in Romania or by free deposits abroad. The gold deposit in Moscow and the Gold Treasury Bonds issued for the debts incurred by the government were removed from the National Bank of Romania’s total cover. Stabilisation was reached on the back of a foreign borrowing by the Autonomous Monopolies Institute, the so-called 7% 1929 Stabilisation Loan.

Convertibility of the leu consisted largely in the conversion of the NBR’s banknotes into foreign currency. Only amounts equalling lei 100,000 or more could be converted. The Great Depression brought about massive bank runs and boosted demand for foreign currency. The convertibility of

9

the leu was supported until May 1932 and had a detrimental impact on the National Bank of Romania’s reserves consisting in foreign means of payment. The Romanian government and the National Bank of Romania have repeatedly taken new loans from foreign markets in order to cover the external debt service and maintain the stability of the domestic currency. We proceed by naming only some of them.

In March 1931, the Development Loan totalling 1,325 million French francs or lei 7,506,958,230 was taken at an interest rate of 7½%, representing the final tranche of the Stabilisation Loan.

In December 1931, Banque de France granted the National Bank of Romania a loan in amount of 250 million French francs, secured with gold deposited by the National Bank of Romania with Banque de France and with part of the commercial paper of the issuing bank.

In February 1932, a group of French banks granted the Autonomous Monopolies Institute a campaign loan worth 150 million French francs. The Autonomous Monopolies Institute paid this amount to the Romanian government which used it for making current payments.

On 8 August 1932, a group of Swiss banks led by Union des Banques Suisses granted the Romanian government a campaign loan amounting to 50 million Swiss francs to which another 20 million Swiss francs were added in 1935. This amount was not actually paid to the Romanian government, as it was blocked by the creditor banks until the debt was written off. The loan was secured with commercial bills issued by the Forest Range. The Ministry of Finance released this loan to the National Bank of Romania and received the financial equivalent in domestic currency; 35% of the loan amount was part of the total cover of the central bank.

A new campaign loan worth 120 million French francs and 5 million Dutch florins was granted on 19 December 1932 to the Autonomous Monopolies Institute by a bank consortium led by Banque de Paris et de Pays Bas. The same as before, the amount was not paid directly to the debtor, but was blocked by the creditor banks until the loan was liquidated. The National Bank of Romania paid the Autonomous Monopolies Institute the financial equivalent in domestic currency for this loan.

Due to the fact that all foreign means of payment had been used up, the convertibility of the leu was suspended de facto starting with 17 May 1932. Consequently, all foreign exchange transactions were carried out at the National Bank of Romania, whilst the issuing bank established the bid and ask rates.

Meanwhile, on 12 August 1933, the government ceased to service the external debt. Payments were resumed after negotiations which ended in mid-1934. The creditors agreed to delay the amortisation of public debt until 31 March 1937 and to reduce the annual coupon by 25%, 35% and 42% respectively for the March 1934 – March 1937 period. Overdue payments during 1 October 1933 – 31 March 1934 were cancelled.

10

It should be mentioned that Romania was not the only country faced with this state of affairs. Shortly thereafter, the Great Depression caused the suspension of convertibility of many European currencies, the imposition of severe control over foreign exchange transactions and the cessation of external debt service. The landmark of the period was considered to be the fact that, on 21 September 1931, the Bank of England ceased to use the gold exchange standard. Thereupon, Sweden, Norway, Denmark, Portugal took the same decision. In September 1931, Greece decided to suspend the convertibility and proceed to foreign exchange control, followed by Austria, Bulgaria, Czechoslovakia, Yugoslavia, Estonia, Finland, Argentina and Brazil in October, and Italy in November. The United States of America diminished by 40% the gold content of the dollar during April 1933 – January 1934. In the space of one year, forty-two states stopped using the gold exchange standard.

In response to the suspension of convertibility and massive devaluations, central banks, including the National Bank of Romania, started to liquidate their foreign exchange reserves after 21 September 1931, concomitantly increasing the payment of commitments in solid gold.

As mentioned before, the restrictions imposed by other countries on the making of payments and foreign exchange movements required the adoption of similar regulations in Romania as well. Clearing and payment agreements were concluded with most European countries, which caused a large part of foreign exchange inflows to be recognised in the clearing accounts.

In light of the above, some methodological specifications need to be made. As concerns foreign currency, the international reserves of the National Bank of Romania were considered to include the foreign exchange traded freely on the forex market. Therefore, the holdings in the clearing accounts, as well as the foreign exchanged pledged as collateral for loans were not included in the international reserves.

The level of Romania’s external public debt and the need to cover repayment of principal and interest payments from the National Bank of Romania’s holdings required new specifications to be stated, as the bank carried out, according to the law, operations specific to the State Treasury, free of charge. Thus, the amounts in convertible currencies used as provisions for public debt were assumed to be recognised in the balance sheets of the bank. Such amounts were considered to be part of the international reserves of the bank.

Moreover, the monopolistic position of the National Bank of Romania concerning foreign exchange transactions also obliged the issuing bank to recognise in its balance sheet amounts in foreign currency in order to meet the importers’ requirements.

Pressures on the national economy and the after effects of the depression entailed the depreciation of the leu, despite the measures taken by the National Bank of Romania and the Romanian authorities. In this context, the revaluation of the National Bank of Romania’s gold stock was decided on 7 November 1936, when a 38% premium was added to the stabilisation price (lei 111,111.11 per kg), which pushed the gold price higher (lei 153,333.33 per kg); thus, the leu was subject to devaluation as compared with the exchange rate established in 1929.

11


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Romania was facing yet again a situation similar to that in other countries. As mentioned earlier, the United Kingdom and the United States of America had already agreed upon the devaluation of their currencies. The same decision took Austria (30 March 1935), Switzerland (27 September 1936), the Netherlands (28 September 1936), France (1 October 1936), Italy (5 October 1936), Czechoslovakia (6 October 1936).

Economic developments on a global scale had a significant impact on the National Bank of Romania’s international reserves in the second interwar decade. At the beginning of the decade, the reserves were replenished by a considerable loan. Later on, the economic context led to the decline in foreign exchange reserves until they were exhausted. During this period, special mention deserves the increase in the gold reserves and the accompanying decrease in the foreign exchange reserves, given that the economic crisis cast serious doubt on the real possibility of many currencies to be converted into gold, as well as on their intrinsic value.

12

4. National Bank of Romania’s international reserves during wartime (1939-1944)

The tense international relations and the outbreak of World War II had a profound impact on world economy and implicitly on Romania’s economic standing. The country was forced to concede approximately one third (or 97,790 km2) of its national territory (namely Bessarabia, Northern Bukovina, North-West Transylvania and Southern Dobrudja), one of the consequences being a weaker economic capacity. On top of it all, Romania entered the war on the side of Germany and its allies on 22 June 1941, which entailed further economic strains. Besides war expenses, the reconquest of Bessarabia and Northern Bukovina called for further funds to replace Soviet roubles with the Romanian currency.

On 23 August 1944, Romania shifted sides and joined the Allies in a desperate attempt to keep its territorial losses to a minimum. The Armistice Convention concluded on 12 September 1944 between Romania and the United Nations and in particular the way in which its provisions were implemented by the Soviet military commandment put further pressure on the Romanian economy and hence on the NBR’s international reserves. Among other numerous obligations, Romania had to withdraw from circulation the roubles and leu cash introduced by Soviet troops. According to estimates, Romania’s financial efforts related to fulfilling the obligations assumed through the Armistice Convention amounted to lei 7,026.8 billion September 1944 through 31 March 1947; other estimates put the figure at some 1.5 billion US dollars.

All these bore an influence on the National Bank of Romania’s international reserves as well. Thus, its composition witnessed an interesting development, reflecting the authorities’ hesitations between the desire to safeguard the reserves and the ever more pressing needs with the war waging on.


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lei million

Gold Foreign currency Gold treasury bonds

13

Some methodological specifications are needed in order to pinpoint the composition of this indicator. In a decree-law issued on 7 September 1939, the Romanian Government let the central bank decide whether to include foreign currencies in the total cover. It was believed that the outbreak of war would damage the equilibrium within the international monetary system and engender a loss of confidence in the currencies of belligerent countries. Although this option might have seemed somewhat thoughtless in September 1939, it proved to be valid during the years to come. The National Bank of Romania gradually managed to lower significantly the number of freely-convertible currencies. On 12 March 1940, this category included such currencies as the pound sterling, the US dollar and the Swiss franc, with only the latter two remaining as of 1 April 1941.

Romania’s joining the war imposed further constraints upon the central bank in determining the liquidity of its reserves. Thus, as early as 10 October 1940, the US authorities were blocking Romanian funds on American soil, including the NBR’s gold and forex deposits with US banks. This meant that significant resources in both gold and foreign currencies, particularly US dollars, were no longer under the control of the Bucharest authorities. The rupture between the two states reached its climax on 12 December 1941, when Romania declared war against the United States, although the American response came as late as 4 June 1942. The state of war also meant that the US dollar was no longer officially quoted in Bucharest. As for the United Kingdom, diplomatic ties had been severed ever since February 1941, with the state of war occurring on 6 December 1941.

In this context, some particulars of the German currency are worth mentioning. According to the monetary law of 1939, the German mark was no longer defined through a quantity of gold, but through cheques and bills of exchange, treasury bonds issued by the Reich, securities and receivables from Lombard credit, thereby excluding it from among freely-convertible currencies. In addition, several agreements were signed between Romania and Germany setting an overvalued exchange rate of the mark against the leu.

Taking into account the above-mentioned issues, one may conclude that – apart from the gold in the total cover – the National Bank of Romania’s international reserves also included liquid funds in Swiss francs and US dollars held with banks in neutral or German-occupied territories. The pound sterling falls under the same category, but only until the beginning of 1941.

Given that the warfare could trigger unexpected and unwanted changes on the foreign exchange market, the Romanian authorities counted on gold, although German leaders urged their allies to centre their monetary systems on the Deutschmark. Throughout the war, the Romanian government made constant efforts to increase the country’s gold stock through domestic and external purchases. At a certain point in time, the Ion Antonescu cabinet even required that Romanian deliveries of grains and oil be paid by Germany in gold.

14


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Despite the increase in the NBR’s total cover, the banknote issue led to several changes in the gold price, which actually meant that the new authorities had to reckon with a new depreciation of the domestic currency. On 19 May 1940, the National Bank of Romania’s gold stock was revalued at a price of lei 229,999.99 per kg, to reach lei 211,111.10 per kg almost a year later, on 1 April 1941.

It appears that this was not enough to cover the banknote issue required for waging the war. Therefore, on 10 December 1941, the central bank was authorised through a decree-law to also make use of the Gold Treasury Bonds transferred by the Ministry of Finance to the public debt account in order to pay its debts. According to statistical data, on 30 June 1942, Gold Treasury Bonds were among the components covering the debts of the National Bank of Romania. Their amount recorded impressive growth, accounting for approximately 45% of the National Bank of Romania’s total cover at year-end 1944.

The central bank’s international reserve posted a steady increase given that the Romanian authorities considered gold as the main component of the reserves. However, the analysis of these developments should take into account the gold stock revaluation which engendered further depreciation of the leu compared to 1929.

15

5. Conclusions

The developments in Romania’s international reserves during 1920-1944 were marked by ample fluctuations triggered by the Great Depression, the economic environment generated by World War II as well as by the importance of gold as an international means of payment.

Furthermore, the composition of reserves was aimed at fully including gold and foreign currencies on stock, as well as those foreign currencies outside the stock that were readily available to the central bank, excluding any mortgaged or blocked ones. As mentioned earlier, foreign currency provisions related to external debt payments were also included, although they were recognised separately within international reserves. Similarly, the aim was to recognise Gold Treasury Bonds separately within the total cover.


010,00020,00030,00040,00050,00060,00070,00080,00090,000

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lei million

16

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* * * National Bank of Romania Archives: – General Accounting, – External Accounting, – Research Division, – Secretariat Division

* * * Armata Roşie în România, Documente 1944-1948, vol. I, Bucharest, 1995

* * * Reports of the Board of Directors of the NBR to the General Shareholders’ Meeting, 1919-1945.

Axenciuc, Victor Evoluţia economică a României, Cercetări statistico-istorice 1859-1947, vol. I Industria, vol. II Agricultura, vol. III Comerţul, Editura Academiei Române, Bucharest, 1992-1998

Introducere în istoria economică a României, Editura Fundaţiei România de Mâine, Bucharest, 1997

Calafeteanu, Ion (coordonator)

Istoria politicii externe româneşti în date, Editura Enciclopedică, Bucharest, 2003

Dobrovici, Gh. M. Istoricul dezvoltării economice şi financiare a României şi împrumuturile contractate 1823-1933, Bucharest, 1934

Evoluţia economică şi financiară a României în perioada 1934-1943, Bucharest

Flandreau, Marc, Zumer Frédéric

The Making of Global Finance 1880 -1913, OECD, Paris, 2004

Hamangiu, Constantin Codul general al României, Librăria Universală Alcalay & Co., Bucharest

Kiriţescu, Costin C. Sistemul bănesc al leului şi precursorii lui, vol. I-II, Editura Enciclopedică, Bucharest, 1997.

Kiriţescu, Costin C., Dobrescu, Emilian M.

Moneda Mică enciclopedie, Editura Enciclopedică, Bucharest, 1998

Ionescu, Lazăr Relaţiunile dintre Banca Naţională a României şi Stat 1880-1935, Bucharest, 1935

Marinescu, G.C. Banca Naţională a României, Legi, statute, dispoziţiuni monetare, convenţiuni financiare etc., Bucharest, 1939

Maddison, Angus L’économie mondiale. Une perspective millénaire, OCDE, Paris, 2001

Reichlin, Lucrezia The Euro Area Business Cycle: Stylized Facts and Measurement Issues, Centre for Economic Policy Research, London, 2004

Rist, Charles Histoire des doctrines relatives au crédit et à la monnaie depuis John Law jusqu’à nos jours, Dalloz, Paris, 2002

Annexes

Annex 1

lei

lei US dollars*30.06.1920 495,458,929 1,124,763,115 1,620,222,044 38,230,81731.12.1920 495,458,998 2,704,763,113 3,200,222,111 40,002,776 2,263,000,00030.06.1921 495,458,998 3,364,263,113 3,859,722,111 60,783,02531.12.1921 495,458,998 4,086,131,113 4,581,590,111 32,961,080 3,676,000,00030.06.1922 510,744,725 4,264,289,114 4,775,033,839 28,765,26431.12.1922 533,055,300 4,637,049,114 5,170,104,414 29,798,873 4,069,000,00030.06.1923 545,266,025 4,857,049,113 5,402,315,138 27,215,69331.12.1923 555,407,792 5,456,251,078 6,011,658,870 30,987,932 4,679,900,00030.06.1924 560,929,066 5,456,251,077 6,017,180,143 24,967,55231.12.1924 562,959,364 5,936,841,298 6,499,800,662 33,394,819 5,107,800,00030.06.1925 562,960,733 5,936,841,298 6,499,802,031 29,849,83731.12.1925 566,664,612 6,333,815,370 6,900,479,982 31,762,854 5,679,833,33330.06.1926 569,122,199 6,435,700,633 7,004,822,832 31,341,489 5,679,833,33331.12.1926 572,113,865 6,454,673,333 7,026,787,198 36,645,566 5,679,833,33330.06.1927 575,113,314 6,454,673,333 7,029,786,647 42,126,062 5,679,833,33331.12.1927 578,427,915 6,454,673,333 7,033,101,248 43,564,260 6,123,713,33330.06.1928 581,814,230 6,454,638,333 7,036,452,563 43,036,407 6,123,713,33331.12.1928 570,747,723 6,627,638,333 7,198,386,056 43,363,771 6,623,713,33330.06.1929 8,691,517,926 1,907,242,950 10,598,760,876 63,040,95731.12.1929 9,185,360,330 6,745,413,715 45,746,934 74,302,115 988,375,106 17,039,198,200 101,921,27230.06.1930 9,275,434,874 1,322,519,062 … … … … …31.12.1930 9,275,434,874 1,745,517,458 1,912,722,143 21,861,163 452,470,187 13,408,005,825 79,904,68330.06.1931 8,837,841,552 1,666,880,770 704,688,490 711,028,724 11,920,439,536 71,028,98631.12.1931 9,675,034,403 277,594,034 126,927,896 14,839,103 229,013,929 10,323,409,365 61,750,26530.06.1932 9,427,408,882 104,382,102 355,128,865 229,013,928 10,115,933,777 60,509,23431.12.1932 9,526,877,935 494,515,000 719,199,612 3,607,500 229,013,929 10,973,213,976 65,637,12230.06.1933 9,711,816,642 653,930,188 341,329,745 241,312,887 10,948,389,462 84,871,23631.12.1933 9,895,475,042 257,435,288 184,313,095 57,219,864 10,394,443,289 96,244,84530.06.1934 10,096,811,959 97,840,500 258,180,612 10,452,833,071 105,265,18731.12.1934 10,285,131,700 91,005,400 355,341,329 10,731,478,429 107,854,05530.06.1935 10,561,798,790 91,425,100 198,433,935 10,851,657,825 109,612,70531.12.1935 10,801,939,441 91,836,000 205,044,830 11,098,820,271 111,545,93230.06.1936 11,040,577,109 352,282,721 11,392,859,830 114,501,10431.12.1936 15,568,160,294 1,802,044,643 17,370,204,937 175,456,616

Foreign exchange provision

Autonomous Monopolies Institute

of which Gold Treasury Bonds included in total

cover

International Reserves of the NBR during 1920-1944

Foreign exchange provision for exceptional

circumstances

TOTAL

Date Gold foreign exchange on

stock

Gold Other foreign exchange

outside the stock

Commercial bills denominated in foreign currency

Annex 1

continued lei

lei US dollars*30.06.1937 15,863,291,305 1,352,208,152 1,247,091,000 18,462,590,457 186,490,81331.12.1937 16,457,784,282 775,360,589 2,425,322,139 19,658,467,010 200,045,45630.06.1938 16,872,159,921 585,021,993 2,639,609,038 20,096,790,952 201,977,79931.12.1938 18,190,487,490 306,258,554 2,639,609,038 21,136,355,082 205,686,60130.06.1939 18,755,687,410 211,993,587 2,639,609,038 21,607,290,035 211,318,24031.12.1939 20,767,950,284 163,571,364 1,017,155,411 21,948,677,059 212,887,26530.06.1940 31,606,753,815 1,735,669,677 1,130,840,398 34,473,263,890 337,146,83531.12.1940 32,155,991,527 1,058,307,075 4,977,458,884 38,191,757,486 373,513,52130.06.1941 32,973,665,711 225,705,141 33,199,370,852 336,196,16131.12.1941 34,291,592,922 380,726,349 34,672,319,271 351,147,65330.06.1942 39,660,393,958 717,238,601 40,377,632,559 408,928,829 1,835,000,00031.12.1942 45,506,008,879 2,730,782,233 1,042,620,805 49,279,411,917 498,275,146 7,415,000,00030.06.1943 49,394,362,704 346,075,915 3,047,842,651 52,788,281,270 534,998,290 4,670,000,00031.12.1943 59,600,004,604 165,798,501 441,504,850 60,207,307,955 610,188,588 10,786,000,10730.06.1944 69,566,979,844 … … … … 20,558,000,00031.12.1944 90,668,700,302 507,095,501 1,055,363 91,176,851,166 924,058,490 40,500,000,000

Source: National Bank of Romania ArchivesReports of the Board of Directors of the NBR to the General Shareholders’ Meeting, 1921-1945

Foreign exchange provision for exceptional

circumstances

of which Gold Treasury Bonds included in total

cover

Date Gold Gold foreign exchange on

stock

Other foreign exchange

outside the stock

Commercial bills denominated in foreign currency

Foreign exchange provision

Autonomous Monopolies Institute

TOTAL

* for 1920 - 1932, the leu/US dollar exchange rate in the last day of the month published in "Official List of Securities" was used; for 1933 - 1944, the NBR's official exchange rate considered in statistical reports was used.

Annex 2alei

coins coins coins bullions31.12.1920 314,817,733 362,248 80,469,650 98,105,80031.12.1921 314,817,733 362,248 80,469,650 98,105,80031.12.1922 314,817,733 362,248 80,469,650 98,105,80031.12.1923 314,817,733 362,248 14,853,900 1) 98,105,80031.12.1924 314,817,733 362,248 14,853,900 98,105,80031.12.1925 314,817,733 362,248 14,853,900 98,105,80031.12.1926 314,817,733 362,248 14,853,900 98,105,80031.12.1927 314,817,733 362,248 14,853,900 98,105,80031.12.1928 314,817,733 362,248 0 2) 98,433,38531.12.1929 0 0 3) 0 2,613,607,806 1,305,858,92231.12.1930 2,613,607,806 1,305,858,92231.12.1931 1,808,610,570 1,960,028,70231.12.1932 1,580,805,370 772,910,500 868,741,525 5)

30.06.1933 1,580,805,370 772,910,500 868,741,52531.12.1933 1,580,805,370 772,910,500 868,741,52530.06.1934 772,910,500 868,741,52531.12.1934 772,910,500 868,741,52530.06.1935 772,910,500 868,741,52531.12.1935 772,910,500 868,741,525 4,838,69930.06.1936 772,910,500 868,741,525 9,677,40031.12.1936 6) 1,066,616,490 1,198,863,290 13,354,81230.06.1937 1,066,616,490 1,198,863,290 13,354,81231.12.1937 20,141,20430.06.1938 20,141,20431.12.1938 909,124,000 7) 26,933,18630.06.1939 … …31.12.1939 2,458,124,000 33,590,41430.06.1940 8) 3,687,185,920 2,610,199 47,775,42031.12.1940 2,042,349,366 2,610,199 1,693,012,72630.06.1941 9) 2,193,881,501 2,395,834 2,461,632,164 139,133,663 343,855,98631.12.1941 2,193,881,498 10) 414,113,055 2,461,632,165 10) 139,133,663 62,703,21030.06.1942 2,193,881,498 634,321,773 2,461,632,165 139,133,663 62,703,21031.12.1942 2,193,881,498 874,682 2,461,632,16530.06.1943 2,193,881,498 874,682 2,461,632,16531.12.194330.06.1944 … … … … …31.12.1944 2,193,881,502 130,817 2,461,632,165 2,672,561,889 2,674,924,409

Geographical Breakdown of Gold Stock during 1920-1944

MOSCOW BERLIN LONDON PARISDateBank of

International Settlements

Federal Reserve Bank of New York

Union de Banques Suisses

Gold in deposits abroad

bullions coins

8,503,239,075

National Bank of Switzerland

Annex 2acontinued lei

31.12.1920 14,456 1,689,112 495,458,99831.12.1921 14,456 1,689,112 495,458,99831.12.1922 37,610,758 4) 1,689,112 533,055,30031.12.1923 118,781,465 8,486,647 555,407,79231.12.1924 126,333,037 8,486,647 562,959,36431.12.1925 126,400,237 12,124,695 566,664,61231.12.1926 126,446,122 17,528,063 572,113,86531.12.1927 126,454,818 23,833,417 578,427,91531.12.1928 144,470,461 12,663,897 570,747,72331.12.1929 4,721,874,301 544,019,301 9,185,360,33031.12.1930 9,275,434,87431.12.1931 9,675,034,40331.12.1932 5,333,250,619 971,169,921 9,526,877,935 509,333,26830.06.1933 5,339,848,968 1,149,510,279 9,711,816,642 509,333,26831.12.1933 5,344,465,971 1,301,202,221 27,349,455 9,895,475,042 509,333,26830.06.1934 6,930,004,100 1,440,472,590 84,683,244 10,096,811,959 509,333,26831.12.1934 6,931,906,040 1,696,363,214 15,210,422 10,285,131,701 509,333,26830.06.1935 6,932,089,557 1,886,530,259 101,526,949 10,561,798,790 509,333,26831.12.1935 6,932,847,040 2,185,539,179 37,062,497 10,801,939,441 509,333,27030.06.1936 6,933,275,375 2,278,761,699 177,210,610 11,040,577,109 509,333,27031.12.1936 6) 9,569,240,467 3,619,327,096 69,371,604 31,386,535 15,568,160,294 702,879,98530.06.1937 9,570,924,700 3,737,403,523 146,172,252 129,956,238 15,863,291,305 702,879,98531.12.1937 10,652,874,528 5,625,136,115 92,719,502 66,912,933 16,457,784,282 702,879,98530.06.1938 10,655,693,924 6,108,233,120 17,965,087 70,126,586 16,872,159,921 702,879,98531.12.1938 10,658,846,787 6,545,944,104 12,408,378 37,231,035 18,190,487,490 702,879,98530.06.1939 … … … … 18,755,687,410 702,879,98531.12.1939 20,767,950,284 702,879,98530.06.1940 8) 16,002,724,804 11,776,275,097 29,592,397 60,589,978 31,606,753,815 1,054,319,95431.12.1940 16,058,843,756 12,243,143,658 38,175,629 77,856,193 32,155,991,527 1,054,319,95430.06.1941 9) 14,742,683,668 12,922,243,494 105,289,232 62,550,169 32,973,665,711 967,733,28231.12.1941 14,745,651,135 14,070,986,180 114,936,588 88,555,428 34,291,592,922 967,733,28230.06.1942 14,747,246,961 17,395,520,547 110,076,744 80,877,397 1,835,000,000 39,660,393,958 967,733,28231.12.1942 14,747,419,836 18,528,896,721 114,772,322 43,531,655 7,415,000,000 45,506,008,879 967,733,28230.06.1943 14,749,899,131 25,185,295,466 84,404,842 48,374,920 4,670,000,000 49,394,362,704 967,733,28231.12.1943 10,786,000,107 59,600,004,393 967,733,28230.06.1944 … … … … 20,558,000,000 69,566,979,844 967,733,28231.12.1944 40,500,000,000 90,668,700,302 967,733,282

Source: National Bank of Romania Archives; Reports of the Board of Directors of the NBR to the General Shareholders’ Meeting, 1921-1945.

1) Part of the gold deposited in Berlin worth lei 65,615,750 was brought back to Romania; 2) The NBR gave up, in virtue of the convention of 10 November 1928, its gold deposit with Reichsbank in order to put an end to the disputes with Germany and take the loan needed for monetary stabilisation; 3) The Romanian Government Programme for monetary stabilisation and economic development of 7 February 1929 envisaged the removal from the NBR’s total cover of the gold deposited in Moscow and of the Gold Treasury Bonds issued by the Romanian government for extinction of its debt at the issuing house. According to the Monetary Law of 7 February 1929, the definition of the leu was fixed at 10 milligrams of gold with fineness of 9/10; 4) Including the gold from the liquidation of Austro-Hungarian Bank in amount of lei 36,676,500 and the gold from own output; 5) In January 1932, the NBR borrowed 250,000,000 French francs from Banque de France against collateral consisting in commercial paper and gold; the collateralised gold was included in the total cover during 1932-1937; 6) On 7 November 1936, the NBR’s gold stock was revalued at lei 153,333.33 per kg, 38% higher than the 1929 price, i.e. lei 111,111.11 per kg; 7) Gold transferred to Romania in the following years; 8) On 19 May 1940, the NBR’s gold stock was revalued at lei 229,999.99 per kg; 9) On 1 April 1941, the NBR’s gold stock was revalued at lei 211,111.10 per kg; 10) Deposits blocked after the war broke out.


Date

40,165,569,520

of which blocked for permanent reserves of Autonomous Monopolies

Institute, gold bullions

40,310,765,212

TOTALcoins bullions Gold Treasury Bonds

5,355,968,146

Mines and Works Department Baia Mare gold

for refining

Gold and bullions at head office

5,906,395,131

18,276,235,870

Mica SAR miniera bullions for refining

Annex 2bkg

coins coins coins bullions

31.12.1920 101,560 117 25,960 31,64931.12.1921 101,560 117 25,960 31,64931.12.1922 101,560 117 25,960 31,64931.12.1923 101,560 117 4,792 1) 31,64931.12.1924 101,560 117 4,792 31,64931.12.1925 101,560 117 4,792 31,64931.12.1926 101,560 117 4,792 31,64931.12.1927 101,560 117 4,792 31,64931.12.1928 101,560 117 0 2) 31,75531.12.1929 0 0 3) 0 23,522 11,75331.12.1930 23,522 11,75331.12.1931 16,277 17,64031.12.1932 14,227 6,956 7,819 5)

30.06.1933 14,227 6,956 7,81931.12.1933 14,227 6,956 7,81930.06.1934 6,956 7,81931.12.1934 6,956 7,81930.06.1935 6,956 7,81931.12.1935 6,956 7,819 4430.06.1936 6,956 7,819 8731.12.1936 6) 6,956 7,819 8730.06.1937 6,956 7,819 8731.12.1937 13130.06.1938 13131.12.1938 5,929 7) 17630.06.1939 … …31.12.1939 16,031 21930.06.1940 8) 16,031 11 20831.12.1940 8,880 11 7,36130.06.1941 9) 10,392 11 11,660 659 1,62931.12.1941 10,392 10) 1,962 11,660 10) 659 29730.06.1942 10,392 3,005 11,660 659 29731.12.1942 10,392 4 11,66030.06.1943 10,392 4 11,66031.12.194330.06.1944 … … … … …31.12.1944 10,392 1 11,660 12,660 12,671

40,279

Date Bank of International Settlements

Federal Reserve Bank of New York

Union de Banques Suisses

Gold in deposits abroad

bullions coinsNational Bank of Switzerland


MOSCOW BERLIN LONDON PARIS

Annex 2bcontinued kg

31.12.1920 5 545 159,83531.12.1921 5 545 159,83531.12.1922 12,133 4) 545 171,96431.12.1923 38,319 2,738 179,17531.12.1924 40,755 2,738 181,61131.12.1925 40,777 3,911 182,80631.12.1926 40,792 5,655 184,56431.12.1927 40,794 7,689 186,60131.12.1928 46,606 4,085 184,12331.12.1929 42,497 4,896 82,66831.12.1930 83,47931.12.1931 87,07531.12.1932 47,999 8,741 85,742 4,58430.06.1933 48,059 10,346 87,406 4,58431.12.1933 48,100 11,711 246 89,059 4,58430.06.1934 62,370 12,964 762 90,871 4,58431.12.1934 62,387 15,267 137 92,566 4,58430.06.1935 62,389 16,979 914 95,056 4,58431.12.1935 62,396 19,670 334 97,217 4,58430.06.1936 62,399 20,509 1,595 99,365 4,58431.12.1936 6) 62,408 23,604 452 205 101,531 4,58430.06.1937 62,419 24,374 953 848 103,456 4,58431.12.1937 69,475 36,686 605 436 107,333 4,58430.06.1938 69,494 39,836 117 457 110,036 4,58431.12.1938 69,514 42,691 81 243 118,634 4,58430.06.1939 … … … … 122,320 4,58431.12.1939 135,443 4,58430.06.1940 8) 69,577 51,201 129 263 137,421 4,58431.12.1940 69,821 53,231 166 339 139,809 4,58430.06.1941 9) 69,834 61,211 499 296 156,191 4,58431.12.1941 69,848 66,652 544 419 162,434 4,58430.06.1942 69,855 82,400 521 383 179,173 4,58431.12.1942 69,856 87,768 544 206 180,431 4,58430.06.1943 69,868 119,299 400 229 211,852 4,58431.12.1943 231,224 4,58430.06.1944 … … … … 232,148 4,58431.12.1944 237,641 4,584190,258

1) Part of the gold deposited in Berlin weighing 21,167.6 kg was brought back to Romania; 2) The NBR gave up, in virtue of the convention of 10 November 1928, its gold deposit with Reichsbank in order to put an end to the disputes with Germany and take the loan needed for monetary stabilisation; 3) The Romanian Government Programme for monetary stabilisation and economic development of 7 February 1929 envisaged the removal from the NBR’s total cover of the gold

Source: National Bank of Romania Archives; Reports of the Board of Directors of the NBR to the General Shareholders’ Meeting, 1921-1945.

Moscow and of the Gold Treasury Bonds issued by the Romanian government for extinction of its debt at the issuing house. According to the Monetary Law of 7 February 1929, the definition of the leu was fixed at 10 milligrams of gold with fineness of 9/10; 4) Including the gold from the liquidation of Austro-Hungarian Bank weighing 11,831.8 kg and the gold from own output; 5) In January 1932, the NBR borrowed 250,000,000 French francs from Banque de France against collateral consisting in commercial paper and gold; the collateralised gold was included in the total cover during 1932-1937; 6) On 7 November 1936, the NBR’s gold stock was revalued at lei 153,333.33 per kg, 38% higher than the 1929 price, i.e. lei 111,111.11 per kg; 7) Gold transferred to Romania in the following years; 8) On 19 May 1940, the NBR’s gold stock was revalued at lei 229,999.99 per kg; 9) On 1 April 1941, the NBR’s gold stock was revalued at lei 211,111.10 per kg; 10) Deposits blocked after the war broke out.

of which blocked for permanent reserves of Autonomous Monopolies Institute, gold bullions

190,946

TOTALcoins bullions

Mica SAR miniera bullions for refining

48,20453,158

119,193


DateMines and Works Department

Baia Mare gold for refining

Gold and bullions at head office

international reserves of the national bank of romania 1920-1944

Documents