Merkel minister calls for gold reserves as collateral for bailouts

A leading member of Chancellor Angela Merkel's government called Tuesday for cash-strapped eurozone members to use their gold reserves as collateral for any future bailouts, according to dpa. Labour Minister Ursula von der Leyen said in the future that money from the European Union-led rescue fund should only be paid out when the states receiving the assistance provided collateral. Von der Leyen believes that the gold reserves and industrial holdings held by many nations could be used as collateral for loans, according to information from German public television. The Labour Minister, who is a vice president of Merkel's conservative Christian Democrats (CDU), is also member of a special new CDU party commission set up to review the debt crisis gripping parts of the 17-state eurozone. The commission was established following conflict within the ranks of the CDU over how to deal with the financial problems facing members of the currency bloc. Von der Leyen's comments also came amid signs of fresh tensions among eurozone members over the 109-billion-euro second rescue package for Greece, which is due to be pieced together next month. About five eurozone states, led by Finland, have been calling for Greece to provide collateral before agreeing to the second bailout out. The price of gold has surged this year amid a flight to safety by investors unnerved by the turmoil in share markets, which has been at least in part triggered by the eurozone debt crisis. Gold climbed to a record high Tuesday, when it breached the key 1,900-dollar an ounce mark.