HC Deb 06 December 1960 vol 631 cc1035-6
1. Mr. H. Wilson

asked the Chancellor of the Exchequer if he is aware that, compared with pre-war, the volume of world trade has increased fourfold while the volume of national currencies required for financing world trade has increased by only 50 per cent.; and whether he will now propose to the Governing Body of the International Monetary Fund, first, that borrowing arrangements should extend to a first tranche of 40 per cent. of the basic quota, and, secondly, that quotas of national currency deposited with the fund should be regarded as ranking equal with gold for the calculation of national reserves of foreign exchange.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd)

While I cannot accept the right hon. Gentleman's figures, I am aware that the average ratio of reserves to imports is lower now than it was in 1938. With regard to the second part of the Question, I would remind the right hon. Member that International Monetary Fund quotas were increased by 50 per cent. in 1959 and this had the effect of increasing the automatic drawing rights of members. In any case, members are not limited to the gold tranche but may borrow from the Fund on certain conditions up to the limit of their drawing rights. As regards the last part of the Question, it is for individual member countries to decide how to classify their own reserves.

Mr. Wilson

These suggestions were put forward in the debate on the Radcliffe Committee last year. Does not the right hon. and learned Gentleman feel that with the problem that one year it is the French franc, another year sterling and the next year the dollar, there is a danger of exchange crises and even unemployment crises being exported from one country to another? Would he not welcome a further increase in the amount of liquidity in world trade?

Mr. Lloyd

I think that the point is not so much the amount of liquidity but whether the right use is made of the resources available. I am very conscious of the problem of imbalance to which the right hon. Gentleman has referred, and which, I think, is very dangerous.