Government Borrowing (Bank Deposits).

Oral Answers to Questions — National Finance. – in the House of Commons on 27th January 1942.

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Photo of Mr William Craven-Ellis Mr William Craven-Ellis , Southampton

asked the Chancellor of the Exchequer to what extent the joint stock banks have exercised their right to convert their deposits, placed at the disposal of the Treasury at the rate of 1⅛ per cent., into long-term Government stock bearing interest at the rate of 2½ per cent. and 3 per cent.; and what is the approximate increase in the cost of Government borrowing resulting from such conversion?

Photo of Sir Kingsley Wood Sir Kingsley Wood , Woolwich West

Since 1st July, 1940, when the system of Treasury Deposit Receipts was instituted, approximately £269,000,000 of deposits have been repaid to enable the banks to subscribe for National War Bonds and Savings Bonds on their own account and on behalf of their customers. The interest payable on such Bonds exceeds by somewhat less than £4,000,000 per annum that payable on the Deposit Receipts redeemed.

Photo of Mr William Craven-Ellis Mr William Craven-Ellis , Southampton

Will the right hon. Gentleman answer the latter part of the Question, if the fact that joint stock banks have undertaken this has necessitated additional borrowing on his part?

Photo of Sir Kingsley Wood Sir Kingsley Wood , Woolwich West

I have answered it. A sum of about £4,000,000 is involved.

Photo of Mr Richard Stokes Mr Richard Stokes , Ipswich

How is it to the advantage of the nation to be paying an increased rate of interest when you can have the money at a less rate?