FRANKFURT – Germany's central bank is to bring back almost 700 tons of gold reserves it keeps in New York and Paris. By 2020, half of its gold bars will be in its vaults, the Bundesbank said. It currently keeps less than a third at home. The bars were originally taken out of Germany as a precaution against an invasion from the Soviet Union. There is no reason now to maintain overseas stockpiles. Bundesbank said from now on, the bank will only keep small amounts of gold abroad for trading purposes. About 30 percent of Germany's gold reserves are currently being held in the country at the facilities of Frankfurt-based Bundesbank. Central banks keep gold abroad so that it can be used to quickly buy foreign currency in times of crisis. The Bundesbank will no longer keep any of its reserves in Paris, as both countries use the euro. It will reduce the amount it holds in New York from 45 percent to 37 percent by the end of the decade. No gold will be moved out of the Bank of England's vaults, however. It will still keep 13 percent of its total reserves in London, the German central bank said. The move follows an audit criticizing Bundesbank for mismanagement, stating the funds had never been “verified physically.” Bundesbank voiced plans to withdraw its entire 450-ton store of gold bullion from the Bank of France in Paris, and a portion of the 1,500 tons currently held by the New York Federal Reserve, Handelsblatt reported. Germany boasts the world's second-largest bullion reserves at 270,000 gold bars ($177.5 billion), second only to the US. Germany's gold stockpile was relocated abroad during the Cold War amid fears of a possible Soviet invasion. The move follows a report by the German Court of Auditors criticizing the management of Bundesbank's foreign bullion stockpiles. Auditors said that the stores “had never been verified physically,” and were not under proper control. Bundesbank was taken aback by the criticism, stressing there was no need for speculation on Germany's overseas holdings and that “there is no doubt about the integrity of the foreign storage sites.” The central bank is widely regarded as one of the most trustworthy institutions in German society. Veteran gold dealer Jim Sinclair said that Bundesbank's strategy marked a change in trends in the global gold market, heralding a move away from paper administration of funds. “This sends a message about storing gold near you and taking delivery no matter who is holding it,” Sinclair told British newspaper the Telegraph. “When France did these years ago it sent panic among the US financial leadership. History will look back on this salvo as being the beginning of the end of the US dollar as the reserve currency of choice.” – Agencies