§ Mr. Joseph Deanasked the Chancellor of the Exchequer whether he has reviewed exchange control policy regarding the premium worthiness of certain foreign currency securities which had been held outside the custody of an authorised depository; and whether he will make a statement.
§ Mr. Robert SheldonYes. Under the Exchange Control Act 1947 virtually all foreign currency securities owned by United Kingdom residents are required to be held in the custody of an authorised depositary. Some depositable securities, particularly Overseas Sterling Area securities which did not become deposit-able until the Scheduled Territories were narrowed on 23rd June 1972, have remained outside such custody. In certain circumstances, however, the Bank of England has, on receipt of an application from an authorised depositary, been prepared to give permission for such securities to be sold with the benefit of the investment currency premium provided that any losses to the reserves from the previous failure to deposit have first been made good.
The passage of time since 1972 has both reduced the case for such treatment and greatly increased the administrative burden of dealing with current applications. I have, therefore, decided that, in respect of such applications received after 31st August 1977, any permission for the sale of securities which had previously been held, despite the exchange control requirement, out of the custody of an authorised depositary will be given only on condition that the sale is made in a way that does not allow the owner to obtain the benefit of the investment currency premium. I am giving three months' notice of this change in policy so that 568W those concerned may have a fair chance to get any such securities into deposit and an application lodged by the authorised depositary with the Bank of England by 31st August 1977.