§ 11. Sir B. Rhys Williamsasked the Chancellor of the Exchequer what study he has made of the extent to which the grant of special drawing rights by the International Monetary Fund will have an inflationary effect on the economy; and if he will make a statement.
§ Mr. Roy JenkinsThe allocation of S.D.Rs. will not in my view have inflationary consequences.
§ Sir B. Rhys Williamsis there not reason to suppose that the grant of these drawing rights will simply wash up in due course as an increase in bank deposits in this country?
§ Mr. JenkinsNo, Sir. The allocation of S.D.Rs will have no direct effect on the money supply in this country. The acquisition of additional S.D.Rs. for currencies will have no more effect than the acquisition of other assets by the exchange equalisation account which has taken place in the past, and which has not been thought to have that effect. The effect of S.D.Rs. is to add to world liquidity, not to increase world inflation.
§ Mr. Patrick JenkinCan the Chancellor say anything about the progress made by other signatories towards ratifying the agreement? Does he wish to modify the estimate which the Financial Secretary gave to the House during the debate on the Bill that this scheme would become operative in the first half of next year?
§ Mr. JenkinsNo, I do not think so. This is by its nature something which cannot be firmly predicted, but it is a hope to which I stick and to which Mr. Schweitzer sticks.