HL Deb 28 January 1969 vol 298 cc1115-7

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

[The Question was as follows:

To ask Her Majesty's Government—

  1. (1) When the Special Drawing Rights in the International Monetary Fund explained in the White Paper of last June (Cmnd. 3662) can begin to be used;
  2. (2) How much new international credit money they expect to be created by this means in the next five years; and
  3. (3) Whether they will consult with the new United States administration, and other Governments, on the possible inadequacy of this scheme.]


My Lords, the first decision to allocate Special Drawing Rights will be made after enough members of the Fund have ratified the scheme: this process may be completed in the early part of this year. The amount of the first allocation remains to be decided, but for the first five years the amount should be in the range of 1 billion dollars to 2 billion dollars a year. It is altogether premature to conclude that the scheme is inadequate.


My Lords, I should like to thank the noble Lord for his full reply. May I ask whether Her Majesty's Government agree—I hope they do—with the figures which the noble Lord gave us last July, showing that the total amount of world reserves is only 40 per cent. of world trade, compared with 100 per cent. in 1938? Is the noble Lord really saying that Her Majesty's Government think that there will inevitably be recurring balance-of-payments crises in the Free World, however well we behave, unless we can get a much bigger amount of world reserves than, according to his Answer, seems possible under the Special Drawing Rights scheme?


My Lords, it is difficult to debate this in the form of question and answer. The figures I gave last July are the figures by which Her Majesty's Government stand. If the amount of the Special Drawing Rights comes to the figure of 2 billion dollars that I mentioned, this will be an increase of 3 per cent, to the world reserves; and it will be an accumulative increase of 3 per cent, each year. The first thing is to get confidence in this matter. Once confidence is established, there is no reason why it should not develop from a complement to gold to an alternative.


My Lords, I thank the noble Lord. I agree that we cannot debate at Question Time whether 3 per cent, is adequate. I think it is hopelessly inadequate. Is there any possibility of discussing this with the new United States Administration?


My Lords, obviously there is a possibility, although no particular proposal is in mind. The House discussed this point at great length on the I.M.F. Bill. I feel that what we have to do now is to get the scheme ratified by the necessary number of nations and then to see how we go.


My Lords, will Her Majesty's Government remember that it is not only a question of the necessity of financing trade deficits, to which my noble friend referred, but that the amount of mobile funds in the world, which is increasing at a very rapid rate, is the chief menace to monetary stability in the world?


My Lords, even these funds are merely a result of something else. So far as we are concerned, the basic necessity is to get ourselves into a position in which we can pay our way. Until we are doing that, no amount of international agreement will solve this problem. We have, over a period of time, to pay in goods and services an amount equivalent to the goods and services that we import.


My Lords, have the French Government ratified this agreement?


My Lords, I think the answer is, No. Twenty-nine countries have ratified. On present information I do not believe that the French are one of them, but I understand that they are going to ratify.

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