§ 3.8 p.m.
§ LORD BARNBYMy 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 the total sterling obligation at currently ruling exchange rate arising from guarantees to certain categories of overseas depositors of sterling.
THE LORD PRIVY SEAL (EARL JELLICOE)My Lords, no obligation has 445 yet been incurred. It might help your Lordships if I were to explain the basic arrangements for implementation of the guarantee under the Sterling Area Agreements, which have remained confidential since 1968. The guarantee will be implemented if the middle sterling/United States dollar rate falls and remains throughout a period of 30 consecutive days below 2.3760 dollars (that is, 1 per cent. below 2.40 dollars, which was the parity at the time when the arrangements were concluded). The guarantee applies to sterling balances defined as eligible in the agreement with each country. It provides that a payment or credit will be made in sterling to the account of the Government or central bank concerned of the amount which makes good in dollar terms the difference between 2.40 dollars and the closing middle sterling/U.S. dollar rate in London on the last working day of the 30-day period referred to. Any such payments will be made from the exchange equalisation account.
§ LORD BARNBYMy Lords, may I ask my noble Leader whether it is to be understood from that Answer that there is any change, in fact or in degree, in the character of the guarantee and its percentage, arising from a change from a fixed rate to a floating rate? Could he also possibly indicate the total amount of existing funds affected by this guarantee?
EARL JELLICOEMy Lords, the answer to the first supplementary question is, No, and I think the answer to the second supplementary question is that I would refer my noble friend to the latest published figure given in the September, 1972, issue of Economic Trends, namely, that the total amount of official sterling reserves eligible under the guarantee at the end of June was a total of £2,920 million.
§ LORD BARNBYMy Lords, arising from that answer, would it not seem that the unbending attitude of both the previous and the present Government to the fact that a floating rate was not viable seems to have been entirely (as regards its effectiveness) disproved?
EARL JELLICOEMy Lords, I am not quite certain that I get my noble friend's point, but seeing that I have been 446 speaking for 14 minutes in answer to his Question I feel that perhaps I should terminate it now.