§ 3.5 p.m.
§ [The Question was as follows:
§ To ask Her Majesty's Government whether they are generally satisfied with the present arrangements provided by the International Monetary Fund in view of the exchange difficulties frequently being encountered by various countries, and the pressures to which key currencies, such as the dollar and sterling, have been recently subjected.]
§ THE MINISTER WITHOUT PORTFOLIO (LORD MILLS)
Yes, my Lords. The International Monetary Fund already provides substantial facilities on which member countries can draw if they suffer temporary balance-of-payments difficulties. The effectiveness of these facilities in relieving pressure on a reserve currency was demonstrated by the assistance totalling 2,000 million dollars, which was arranged for the United Kingdom last year. The ability of the Fund to protect the major currencies used in international trade from speculative pressures will be further enhanced by the arrangements for borrowing supplementary resources from member countries, which were debated in your Lordships' House on April 5 last.
§ LORD CASEY
My Lords, I am grateful to the noble Lord for his reply, but perhaps I may be allowed further to seek to lighten my darkness in these matters by putting my question in another way. Are Her Majesty's Government satisfied that the resources in 1118 the hands of the International Monetary Fund are adequate to ameliorate the short-term balance-of-payments problem of a number of countries, particularly in the environment of a rapidly expanding world trade; and are they also adequate to protect the principal currencies, sterling and the dollar and the currencies depending on them? Further, if the answer to that is "No", or a qualified "No", would Her Majesty's Government consider action designed towards increasing the resources in the hands of the International Monetary Fund, or, if possible, a rearrangement of its resources and methods of using them designed to improve the situation, in the light of the very considerable number of countries throughout the world which are to-day, for one reason or another—I think many of the reasons are legitimate—suffering balance-of-payments problems?
§ LORD MILLS
My Lords, with the additional resources to be made available under the borrowing arrangements, the Fund's resources should be sufficient for most of the contingencies likely to arise at the present time. As regards the future, the Fund's Articles of Agreement already enable it to seek further increases in its resources as it may find necessary. The Fund has shown itself well able to adapt itself to new situations, and I am confident that it will continue to do so.
It may be of interest if I may quote from the remarks of Mr. Jacobsson, the Managing Director of the International Monetary Fund, made in his address to the Economic and Social Council of the United Nations on April 6. I should like both to quote them and to endorse them. He said:I think that great progress has been made in the past year in establishing and consolidating the necessary contacts and generally strengthening the machinery for co-operation in the international monetary system. Such steps as already have been taken in developing that system, as for instance the Fund's borrowing arrangement, do not of course close the door to future measures that in due course may be found appropriate. Attention must naturally be concentrated in the first place on the difficulties which are of immediate concern to-day, but the spirit of broad and willing co-operation evidenced among nations in recent months in these matters justifies confidence in their ability to find constructive solutions not only to present problems, but also to those which the future may hold in store for us.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
My Lords, would it be possible to have printed in the OFFICIAL REPORT exact particulars of the additions recently made to the resources, to which I think this country has contributed, the amounts other countries contributed, and the total resources generally available?
§ LORD MILLS
Yes, my Lords, I will see that that is done. We debated this matter on April 5 and your Lordships will find a good deal of the information in the OFFICIAL REPORT, but I will see that it is brought up to date, as the noble Viscount the Leader of the Opposition suggests.
§ LORD BARNBY
My Lords, arising out of the first reply of the noble Lord to that part of the Question which dealt with exchange difficulties and the pressure on currency such as the dollar, which presumably includes the Canadian dollar, and in view of the announcement to-day of the further depression in value of the Canadian dollar, is he in a position to give the House any more details of exactly what that involves?
My Lords, are Her Majesty's Government satisfied that the resources of the Fund are sufficient to cope with crises of confidence in the dollar and in the pound coinciding with each other, and are there any other currencies which it could offer to those who fly from the pound and the dollar? And is it not a fact that the International Monetary Fund is no substitute for an increase in the value of gold?
§ LORD MILLS
My Lords, I will say at once that I am not aware that countries are fleeing away from sterling.
My Lords, I asked whether, if crises of confidence in the dollar and in sterling happened to coincide—and experts think that if there were a crisis in one there would be a crisis in the other—the International Monetary Fund would be in a position to cope.
§ LORD MILLS
My Lords, that is rather a hypothetical question. Your Lordships will remember that the Inter- 1120 national Monetary Fund was basically formed on the dollar, which was then the strong currency. The recent arrangements—and may I first say that I think the Fund has served countries very well—which were made for borrowing up to 6,000 million dollars were designed to bring in other currencies to a greater extent. I think the replies I have given and the quotation I have made from the Managing Director of the Fund show that they have confidence that they could meet any situation which is foreseeable.