ECB sold gold and bought dollars — but it’s not intervention

6:32p ET Tuesday, April 21, 2009

Dear Friend of GATA and Gold:

Not much is more disingenuous than central banking, as the Reuters story appended here suggests. The story reports how the European Central Bank sold gold in 2008 and purchased U.S. dollars with the proceeds, even as the story also reports that the bank “confirmed that it had not intervened in currency markets in 2008.”

But of course selling gold and buying dollars are by definition interventions in the currency markets. Indeed, the very purpose of central banking is market intervention — to prevent free markets alone from setting the value of financial instruments, particularly currencies and government bonds. When a central bank can assert that its actions in the markets don’t constitute intervention and have the assertion reported without the least questioning, you may see how inadequate most financial market reporting is.

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