§ 12. Mr. Bruce-Gardyne
asked the Chancellor of the Exchequer what study he has given to the reactivation of the scarce currency clauses of the International Monetary Fund rules; and if he will make a statement.
§ Mr. Roy Jenkins
That part of the scarce currency provisions of the Articles of Agreement of the International Monetary Fund which permits the Fund to replenish its holdings of strong currencies by borrowing has been used. No useful purpose would be served by trying to activate the remaining provisions in present conditions.
§ Mr. Bruce-Gardyne
Does not the right hon. Gentleman agree that no monetary system is likely to work unless in the last resort there is some provision for external corrective for countries which are either unable or unwilling to correct a long-term surplus or deficit position as suggested in the I.M.F. rules, to which he drew attention earlier? Does not the right hon. Gentleman further agree that the present proposals for the recycling of monetary movement are designed merely to perpetuate surpluses and deficits?
§ Mr. Jenkins
With the very general statement with which the hon. Gentleman began I think I would agree. I think that the scarce currency clause has been to some extent activated and to some extent superseded by the general agreement to borrow in 1962. In any case, as the hon. Gentleman knows very well indeed, any procedure on these matters could be dons only with agreement. The activation of the scarce currency clause has never commended itself to the American Government and would pose very considerable problems within the European Economic Community.