HC Deb 05 December 1957 vol 579 cc599-600
40. Mr. Cronin

asked the Chancellor of the Exchequer what proportion of the increase in the gold and dollar reserves since he raised the Bank Rate to 7 per cent. in September has been brought about by the influx into the United Kingdom of short-term capital funds from abroad.

Mr. Powell

On the best judgment that can be made, and apart from the drawing on the Export Import Bank, the increase has arisen mainly from commercial requirements for sterling.

Mr. Cronin

Does not the hon. Member appreciate that, now that speculation against sterling has largely ceased, any further improvement in the gold reserves brought about by the 7 per cent. Bank Rate will be by the inflow by short-term funds—that is, hot money—which will flow out as soon as the Bank Rate is lowered? Is a 7 per cent. Bank Rate therefore worth it?

Mr. Powell

I told the hon. Member that the best evidence that I have is that this increase has been due to commercial requirements.

Mr. Cronin

Does not the hon. Member mean by "commercial requirements" short-term funds flowing into the country?

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