Sterling Balances

Oral Answers to Questions — National Finance – in the House of Commons at 12:00 am on 27th April 1971.

Alert me about debates like this

Photo of Mr Eric Deakins Mr Eric Deakins , Walthamstow West 12:00 am, 27th April 1971

asked the Chancellor of the Exchequer if it is the policy of the Government to phase out the sterling balances.

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

Early changes in the reserve role of sterling are not practicable. At an appropriate time the Government would be willing to explore possibilities for change with all those concerned, including the official holders of sterling.

Photo of Mr Eric Deakins Mr Eric Deakins , Walthamstow West

Have there been any discussions with the Common Market countries on this issue? Has the right hon. Gentleman or his right hon. and learned Friend the Chancellor of the Duchy of Lancaster given the Common Market countries any undertakings about the future of the sterling balances?

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

I have certainly had no formal talks with the Six. Sterling and other international monetary matters are the subject of discussion whenever I meet my opposite numbers from the European countries. There are interchanges at official level, but these are, and must remain, confidential if they are to be of any value.

Photo of Mr Jock Bruce-Gardyne Mr Jock Bruce-Gardyne , South Angus

Is it true, as was reported recently, that a decision in principle was taken to renew the Basle Agreement without any consultation or discussion with the French Government? If so, was this not a little ham-fisted in view of the parallel negotiations which are continuing in Brussels?

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

I said publicly quite a long time ago that I thought it was in the interests of this country and the sterling area generally that the Agreement should be renewed.

Photo of Mr Roy Jenkins Mr Roy Jenkins , Birmingham Stechford

The right hon. Gentleman has not answered the question put to him by his hon. Friend the Member for South Angus (Mr. Bruce-Gardyne). Will he bear in mind that while it is reasonable that we should envisage a substantial change in the phasing out of the reserve role of sterling, it is necessary to put something in its place, and that it will not be desirable merely to put the whole weight on the dollar, which is itself staggering a little under the excessive reserve burdens which it is carrying?

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

To phase out sterling's reserve réle implies, as the right hon. Gentleman suggested, replacement of the sterling balances by some alternative asset. This would require international co-operation. The point I was making was that the Government would be ready to consider such a move provided that means could be found which avoided an unacceptable burden on the United Kingdom, promoted the healthy development of the international monetary system, and protected the interests of the sterling holders.