§ LORD TERRINGTON
asked Her Majesty's Government:
Whether on grounds of equity they will reconsider the Treasury ruling laid down in Bank of England Guide to Exchange Control 1970 in so far as it relates to a portfolio legacy from a nonresident bearing in mind:—
- (a) that the United Kingdom recipient is not normally obliged to sell the underlying securities;
- (b) that the securities have to be held in restricted deposit; but
- (c) if the United Kingdom recipient wishes for normal and prudent reasons to exchange into other foreign securities he would appear to be put at a financial disadvantage compared with other United Kingdom residents since he can derive no benefit at all from the "dollar premium" on a sale but must incur the full penalty of the "dollar premium" on a subsequent purchase.
THE LORD PRIVY SEAL (EARL JELLICOE)
This matter has been examined in the light of the noble Lord's Question, but the conclusion is that the present rule should stand. The rule is that foreign currency securities inherited by a United Kingdom resident from a person resident outside the scheduled territories must be held in restricted deposit and the foreign currency proceeds of sale must be sold for sterling in the official foreign exchange market. This rule is one of a number of exchange control measures designed to strengthen the United Kingdom reserves. If a United Kingdom resident inheriting foreign currency securities from a non-resident were permitted to use the foreign currency proceeds of sale to buy other foreign currency securities, the reserves would be denied this benefit.
People receiving legacies from non-residents of foreign currency securities which they wish to exchange into other foreign currency securities are not at any disadvantage compared with United Kingdom residents generally who have to pur- 1236WA chase investment currency if they wish to acquire such securities.