§ I turn next to the external developments which have taken place over the past year.
§ International monetary matters
§ For the international monetary system 1971 was certainly a critical year. Strains had already been apparent for some time, and the crunch came with President Nixon's announcement on 15th August—a date I well remember because it was the very day I was due to start my family holiday! After a succession of meetings of the Group of Ten, the agreement which we reached in Washington in December produced a realignment of currencies and the removal of the United States surcharge and related measures. That realignment should in time lead to an adequate turn-round in the United States balance of payments, which is a necessary element in restoring stability in international payments. It is bound to take time to work through, as in the case of any exchange rate change.
§ But that is only one part of the problem. There are other fundamental questions which as yet remain unsolved. The House will, I know, appreciate the point that the United States authorities have not a sufficient stock of reserve assets at present to restore general convertibility of United States dollars held by monetary authorities. But it certainly ought to be 1349 possible to work out acceptable arrangements to enable International Monetary Fund operations to be restored to a more normal basis.
§ This affects in particular our own remaining I.M.F. debt, which now stands at £405 million, and which begins to fall due in June. Our reserves are now ample to repay it, and, as my right hon. Friend the Prime Minister has said, we want to repay it. Indeed, I should like to go further and repurchase also the £83 million of other sterling held by the I.M.F. This would fully reconstitute our so-called I.M.F. gold tranche, giving us £292 million automatically available for drawing from the I.M.F. in case of need as part of our reserves. It is indeed a strange world when we are frustrated in our determination to wipe the slate clean of our debts. I hope a solution will soon be found.
§ My own belief is that a return to a system in which all the major currencies are fully convertible depends on achieving a consensus internationally about the lines on which the international monetary system should be reformed. The crisis last year demonstrated clearly enough that reform is needed. I outlined my own view of the principles on which that reform should be based in my speech at the last I.M.F. annual meeting. The task now is to persuade some others that in the months ahead serious international discussions should take place in a constructive spirit.
§ Meanwhile in Europe I have been having discussions about the progress of the enlarged Community towards economic and monetary union. The steps which are proposed are fully compatible with—and, indeed, complement—the objectives of world monetary reform to which I have just referred.
§ United Kingdom balance of payments
§ The details of the United Kingdom balance of payments last year were published only a fortnight ago. So I can be brief. We had record surpluses, both on visible and on invisible account, resulting in a current surplus of £952 million. Our official reserves more than doubled.