Italy to sell gold reserves to help pay off national debt

Italy is set to sell off some of its gold reserves to help tackle the country's large national debt.

The country's debt runs at 107 per cent of GNP and some gold and currency reserves will be used to alleviate it, the Financial Times reports.

The Bank of Italy has reserves of €38 billion worth of gold and €21 billion in foreign currency, although some of this must be retained under an agreement with the European Central Bank.

A resolution that was approved by parliament this week states that the government will "undertake, also in its relations with the European Union, a survey of all instruments useful to producing a significant reduction of the national debt, through agreed ways of using the reserves of the central banks, in gold and currency, in excess of that required by the agreement with the ECB for the defence of the euro."

The FT suggests that this means the Italian government may re-think the EU limitations that exist on using the gold reserves of central banks.

Other European countries that have recently sold off some of their central bank's gold reserves include France, Holland and Germany.

In June it emerged that the Swiss National Bank would sell off 250 tonnes of its own gold reserves over the coming two years.