§ Mr. Healey
I described this facility in broad outline in my statement on 11th January. I can now indicate the main details that have been settled subsequently and on the basis of which the facility is available to us with effect from 8th February.
The United Kingdom will be entitled to draw on the facility for the full amount in the first year of the facility and 75 per cent. thereafter of any net fall in the 812W official sterling balances below £2,165 million—the level on 8th December 1976. This trigger level of £2,165 million for the official balances will be reduced to the extent of sales of foreign currency bonds. Entitlements to draw may be exercised at any time when the reserves are less than $6,750 million. There is, however, provision that, in consultation and agreement with participants in the facility, drawings may in certain circumstances be made on the facility, notwithstanding that the United Kingdom reserves exceed $6,750 million, in particular where a higher reserves level is attributable to foreign currency borrowing by the public sector.
If no drawing is made in any month in which there is an entitlement to draw, the entitlement may be carried forward into the next period. Any drawings on the facility will be in United States dollars and the interest payable will be closely related to market rates.
An indication will be given at the time of the monthly reserves announcements whether drawings have been made or repaid in any month, and the net amounts involved in any quarter will be given in the quarterly balance of payments statistics.
In administering the facility the BIS will rely as far as possible on deposits and other resources at its disposal to meet any United Kingdom drawings, but these will be supplemented if necessary by recourse to participating central banks.
We are planning to launch discussions with official holders shortly about issues of foreign currency bonds, and I will make further information about this separate but related subject available later.