HC Deb 02 April 1968 vol 762 cc159-62
24. Mr. Biffen

asked the Chancellor of the Exchequer what proposals he has to improve international liquidity.

33. Mr. Hooley

asked the Chancellor of the Exchequer when he expects that the Special Drawing Rights scheme of the International Monetary Fund will be activated; and what steps are being proposed by the Government to have this scheme put into operation as a matter of urgency.

40. Mr. Bruce-Gardyne

asked the Chancellor of the Exchequer if he will make a statement on the outcome of the Ministerial meeting of the Group of Ten on 29th March.

Mr. Roy Jenkins

As the House will be aware, Finance Ministers and Central Bank Governors of the Group of Ten, with one country abstaining, reached agreement at Stockholm last weekend on the amendments to the I.M.F.'s Articles needed to establish a scheme for Special Drawing Rights. Certain changes in the Fund's rules and practices were also agreed. This is a most satisfactory outcome. We have taken a major step forward in strengthening the international monetary system. I expect to bring a Bill before the House later this Session to enable the United Kingdom to take part in the S.D.R. scheme.

Mr. Biffen

Is the Chancellor aware that the Special Drawing Rights scheme which he regards as a satisfactory outcome is a flight from monetary reality? Is not it time that Her Majesty's Government took an initiative to promote a system of floating exchange rates and a free market in gold?

Mr. Jenkins

I am aware that that is the hon. Gentleman's view, but it is one which is not shared by the majority of people either in this country or outside. I am not quite sure exactly what he means by monetary reality. What I mean by monetary reality is doing our best to establish a world monetary system which enables world trade to expand on an orderly basis.

Mr. Hooley

Does my right hon. Friend agree that most people regard the scheme as an extremely important advance in the general question of international liquidity? Will he pay tribute to the valuable work of his predecessor in this regard, and can he say what further initiatives the Government propose to improve international liquidity?

Mr. Jenkins

In my view this is a most valuable advance which is the culmination of four years' very hard work by a great number of people, including my predecessor, who took a leading part at Rio and the two London conferences last summer. This is a big step forward, but the view I took at Stockholm and take now is that it does not of itself solve all our problems. We must constantly look for other means of establishing further world liquidity.

Mr. Bruce-Gardyne

What prospect does the right hon. Gentleman see of the five member of the European Economic Community who signed the communiqué agreeing to the activation of the S.D.R. scheme while the Americans are still in substantial deficit? Does he agree that there is a likelihood that the split-level system will not last until the S.D.R.s can be activated, and will he not close his mind to the possibility of a change in the gold price if the split-level system should be seen to have collapsed during this year?

Mr. Jenkins

The latter part of the hon. Gentleman's question is highly hypothetical. As I said earlier, I believe that the split-level price can last for a substantial period, particularly at present when the split is very small between the two prices which prevail. On the question of the activation of the S.D.R. scheme while the American deficit persists, my view is that it was the general desire of the conference to see signs of a reduction in the American deficit. That is a reasonable desire. If those signs were seen I think that there would be no disposition to wait until the deficit had been eliminated or anything approaching that.

Mr. Cant

Will my right hon. Friend make inquiries to discover whether the speech by the right hon. Member for Wolverhampton, South-West (Mr. Powell) last night, in which he equated S.D.R.s and fools' money, is the official policy of the Opposition?

Mr. Jenkins

Among my many responsibilities I do not have responsibility either for the official policy of the Opposition or the speeches of the right hon. Member for Wolverhampton, South-West. Perhaps he had better sort that out with the right hon. Member for Enfield, West (Mr. Iain Macleod).

Mr. Ronald Bell

Will the Chancellor define what he meant in his last supplementary answer but one by the words "substantial period"? Will he say why we should not hurry along to what he plainly regards as the inevitable conclusion and revalue gold and establish floating exchange rates so that we have a new basis on which to go forward?

Mr. Jenkins

I do not regard that conclusion as either inevitable or desirable.

Mr. Barnett

Is my right hon. Friend aware that there are many hon. Members who will congratulate him and the others present at the Stockholm Conference on achieving something which is a step away from the nonsense of relying on a particular metal? What does he estimate will be the amount that will be utilised under the S.D.R. scheme in the next five years, up to a maximum of 10,000 million dollars?

Mr. Jenkins

I am grateful to my hon. Friend for what he has said. It is difficult, however, to make an estimate of what he asks for. I hope that the scheme, once fully launched, can build up with considerable momentum, but it would be wrong to attempt to give a quantitative estimate in a matter which necessarily concerns not merely nine of the ten members present at Stockholm who agreed to the scheme but the other 97 members of the I.M.F. who were not present.