"A draft paper of the European Commission has suggested that gold could be used as collateral for new Eurobonds. The rationale for any central bank holding gold is straightforward. It can be used as a source of capital if a currency is not redeemable or if a country falls out of favor with the international capital markets. Both India and Korea have used gold as collateral in the last 15 years. The arguments against any Eurozone constituent using gold as collateral currently are powerful. The move would smack of desperation and might even harm a country's ability to borrow, rather than help it. Also the European Central Bank is likely to frown on the idea. While we do not think Eurozone central bank gold will be used by any peripheral nation as collateral in the near term, the subject is on the table and being discussed."