§ 14. Mr. Knoxasked the Chancellor of the Exchequer how many member states currently take part in the exchange rate mechanism of the European monetary system.
§ Mr. RidleyEight.
§ Mr. KnoxIn view of the damaging effects of short-term fluctuations in sterling, does my right hon. Friend not think that it is high time Britain became a full member of the EMS?
§ Mr. RidleyOne of the difficulties, as demonstrated recently, is that when the oil price has been tending to fall, sterling has tended to fall, too. At the same time, the German mark has tended to rise. It is that disequilibrium that occurred before, in the opposite direction, with the oil price rise in 1979. It is a problem that has always presented a difficulty. It remains our policy that we should join the EMS when conditions are right.
§ Mr. Richard WainwrightDoes the Minister not accept that the damaging uncertainty for traders about the international value of sterling would be assuaged substantially if the Government announced that they were starting negotiations with a view possibly to joining the European monetary system?
§ Mr. RidleyI do not think that the instability in exchange rates would be helped by joining or not joining. The instability arises because of varying degrees of success in various economic policies. A change in the price of oil, the balance of commodity prices throughout the world, and a whole mass of matters go into determining exchange rates. They cannot be taken out simply by negotiating in relation to the EMS.