asked Her Majesty's Government:
What is the value of euro reserves purchased by the Bank of England from both sale of gold reserves and other market intervention since the euro was launched, and what is the loss in sterling value of those reserves at current exchange rates.
My Lords, the information sought is contained in the press releases issued by the Bank of England for each auction and is available on its website. The 1.8 billion dollar proceeds from the gold auctions held to date have been reinvested in interest-bearing foreign currency assets broadly in the proportion 40 per cent dollars, 40 per cent euros and 20 per cent yen. The only intervention undertaken since the euro was launched was on 22nd September 2000 when 85 million euros was purchased against sterling. To provide a short-term snapshot of the value of those medium-term portfolio decisions would not be meaningful.
My Lords, I thank the Minister for that informative reply. In the light of the Government's recent intervention to support the euro and press speculation over the weekend that the Government may intervene again, does the Minister stand by what he said in this House on 28th March this year when he assured us that the Government had no policy to intervene to create an artificial change in the euro-pound exchange rate? At that time he went on to explain,
"Attempts to intervene are unlikely to have the desired effect in most cases ... and could create uncertainty and instability in the market".--[Official Report, 28/3/00; col. 729.]
Is that still the position of the Minister and of the Government as a whole?
My Lords, what I said on 28th March was not intended to last for the whole millennium. The noble Lord knows that perfectly well. Circumstances change and we change with them; if we did not we would be very foolish. That was a decision of the Group of Seven. The role of the United Kingdom is well known and I made that clear because we have a policy of transparency. However, I have seen press reports which described us as being only a "token player" in that intervention.
My Lords, would it not have been remarkable if an exercise involving the Bank of Japan, the Federal Reserve Bank and others had not involved the Bank of England? Secondly, can my noble friend comment further on the press reports and confirm that this exercise made a profit?
My Lords, I do not believe I should comment on that press report any more than I commented on the report referred to by the noble Lord, Lord Blackwell. However, I did see it and was interested to read what it said. We are members of G7 and have certain common interests and obligations.
My Lords, does the Minister confirm that the intervention was in the national interest, our national interest being that the euro should be strong and stable and the pound less expensive against it? Does the Minister agree also that some of the interventions on the future of the currency by members of the Conservative Party enjoy the same sort of clarity as their views on the future of cannabis?
My Lords, I hope that they do not change quite as rapidly; no I take that back. Some of the views expressed by members of the Conservative Front Bench I hope they change even more rapidly. Of course, the noble Lord, Lord Watson of Richmond, is right. It is in our interests to have a strong euro. The Chancellor has made that clear on more than one occasion.
My Lords, I apologise for not giving way to the noble Lord, Lord Watson; I did not see him. But is this really a question of Liberal or Conservative policy? Is it not a question of why this Government should support the euro when they do not know whether or not the people of this country want to have it?
My Lords, I am not sure that the noble Lord, Lord Campbell, is making a proper connection between the view that we take about the exchange rate between the euro and the pound--we believe that the pound is over-valued in that regard--and the quite separate question of whether or not we should join the euro, on which our policy has not changed.
My Lords, does not the current value of the euro justify the Minister's statement in the debate on 28th March that it is, if I may paraphrase, pretty futile to intervene in foreign exchanges? The intervention does not seem, in the long term, to have done much good to the euro. Also, are the press reports right that the Chancellor sold those holdings quite quickly, perhaps at a modest profit? If so, does that show that he has long-term confidence in the euro?
My Lords, as I made clear in my first Answer, it does not make good sense to provide a short-term snapshot of the value of these medium-term portfolio decisions. I do not comment on press reports on the profit. I made that clear in answer to an earlier question. And it does not seem to me that now is the time to draw final conclusions in relation to what are, in the end, medium-term portfolio decisions.
I did not say this in response to an earlier question but perhaps I should have done. I read the reports that some governments are thinking of taking advantage of public holidays in order to make further intervention. But I could not possibly comment on that.