§ 4.8 p.m.
§ LORD BESWICKMy Lords, with permission I would repeat a Statement made by the Chancellor of the Exchequer in another place. The Statement is as follows:
"The House will be aware that discussions have been taking place this week-end at the Bank for International Settlements in Basle amongst the representatives of the central banks of 672 certain countries about a new facility for sterling. The proposals which were considered were to provide new means for offsetting fluctuations in the sterling balances of sterling area countries. I should make it clear that the facility under discussion is not one which would provide finance to meet any deficit in the balance of payments of the United Kingdom. It is not a loan. It is not an arrangement which could or will lead to any increase in our total of overseas indebtedness. The object would be to strengthen the position of sterling and thus of the international monetary system as a whole.
"I am glad to be able to tell the House that considerable progress has been made in these discussions. As a result, the Bank for International Settlements and twelve Central Banks, speaking where appropriate with the authority of their Governments, have given firm assurances of willingness to participate in the arrangements which are to be completed as soon as satisfactory consultations have taken place with sterling area countries. These proposals are of great importance to all sterling area countries, and it is therefore right that consultations should take place with them all. These will be pursued urgently, but until they have been completed it would be wrong for me to make any further public statement.
"I should like to express my warm appreciation of the constructive attitude of the countries with which these discussions in Basle have been conducted. I believe that the arrangements now contemplated, and the firm assurances we have had from these countries, offer the prospect of greater stability in the functioning of the international monetary system. While they in no way lessen the need to bring our own policies for restoring the balance of payments of the United Kingdom to a successful conclusion, they make it possible to pursue these policies without being adversely affected by fluctuations in the sterling balances. They are a major step forward in dealing with this long-standing problem."
EARL JELLICOEMy Lords, we are grateful to the noble Lord for repeating this important Statement, although I 673 must say that I should have hoped that we might have been permitted a rather earlier sight of it through the usual channels, especially in view of the fact that a Statement very much along these lines was issued by the Bank of England shortly after luncheon. It is clear that a lot of consultation and much negotiation has still to take place, and I am sure that none of us would wish to say anything at this stage which might in any way prejudice the outcome of those negotiations. I shall therefore confine my questions to a number of relatively simple points.
In the first place, can the noble Lord tell us anything more about the type of financial operation which is involved here? We are told that this animal is not a loan. What, in fact, is it? Secondly, can the noble Lord tell us anything more about the position of France? For example, were the French representatives at Basle this week-end able to subscribe to this firm assurance reportedly given by the representatives of the other central banks? Thirdly, what is the time scale involved? When is it hoped to conclude these negotiations? Fourthly, and finally, can the noble Lord tell us—and I think this is important in view of the great volume of Press speculation that there has been on this subject—anything more about the magnitude of the sum involved and about the interest rate?
§ LORD BESWICKMy Lords, I thank the noble Earl for his general remarks. I share his views about the advantage of an earlier sight of the Statement. As to the type of operation, as I said in the Statement, it not a loan; it is a type of funding operation. It is really an exchange of a short-term sterling indebtedness for a longer-term indebtedness. As to the question about the position of France, I can do no better than to read what was said in the communiqué:
The Bank of France, while in present circumstances it must reserve its position, has expressed itself as sympathetic.France, therefore, has not made any contribution to this arrangement. The noble Earl also asked about the time scale. Consultations will start urgently; in fact in a matter of days, and I hope that they will be completed within a few weeks. I was asked also about the magnitude of the loan. It will be for 2 billion dollars.
§ LORD GLADWYNMy Lords, I and my noble friends on these Benches greatly welcome the principle of the Statement made by the noble Lord. It seems to us, in principle, an extremely healthy phenomenon and is much to be welcomed. If it goes through it will ease the difficulties on the international monetary front to a great extent. I have only two questions to put to the noble Lord. The first one relates to France. From what the noble Lord has said, the Bank of France are sympathetic, as I understand, to this operation. It does not mean that they will therefore, necessarily, come into it, I gather, although they may contemplate doing so. If they do not come in, is it the intention to proceed with the scheme? I imagine that it is; since twelve central banks have already agreed. I imagine that if the French do not come in it will be the intention of Her Majesty's Government to go ahead without them. I should like the noble Lord to give us confirmation of that. Secondly, is it considered, as a result of the measures contemplated, that some portion of the sterling balances will be funded in the long run?
§ LORD BESWICKMy Lords, I thank the noble Lord for his welcome to this Statement. I do not think that I can add anything to what I have already said about France's position. It is the intention of Her Majesty's Government and of the other Governments concerned to proceed with this arrangement, even though the French Government are not able to do more than to express sympathy. The question of future funding is a separate matter. I cannot say anything on that.
§ LORD CARRINGTONMy Lords, may I ask the noble Lord this question? I may not have fully understood him, and he may have mentioned it in the Statement. He said that this would not mean an increase in our total indebtedness. Does this mean that this is really a funding operation, a move from the short-term to the medium-term, and nothing else?
§ LORD BESWICKMy Lords, as I said in the Statement, it is not a loan. As I said in answer to a question, it is a type of funding operation and a question of exchanging one debt for another.