HC Deb 26 March 1959 vol 602 c1497
19. Mr. Cronin

asked the Chancellor of the Exchequer if he will make a statement on his recent decision to allow authorised banks to enter into forward exchange contracts with sterling area residents other than those concerned with visible trade.

Mr. Erroll

My right hon. Friend considers that there is no longer any justification for restricting the right of residents to contract forward for normal transactions if they wish.

Mr. Cronin

Will the hon. Gentleman bear in mind that this progressive dismantling of monetary controls may be comparatively innocuous while the £ is in a period of prosperity, but that it is likely to have a boomerang effect if the £ falls on hard times again?

Mr. Erroll

No, Sir, I do not think it will be, likely to make much difference in this case, because the volume of such transactions is very small in relation to the total of visible trade forward transactions which are at present covered.

Mr. Jay

If that is the case, why have the Government kept this in force for six years?

Mr. Erroll

First, because it was necessary to achieve stability and a strong £ abroad before we could proceed with the dismantling of this control, which we are now doing.

Mr. Jay

If these concessions are safe only when the £ is strong, does not that show, as my hon. Friend suggests, that they are likely to cause trouble when the £ is less strong?

Mr. Erroll

I do not think one could save a deterioration in the value of the £ by reintroducing a control as small as this one.