§ Mr. Austin Mitchell
To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on how CAP prices are affected by a realignment of currencies in the exchange rate mechanism.
§ Mr. Curry
Under the previous agrimonetary system, large monetary gaps between green rates and market exchange rates could build up in the period between two realignments within the exchange rate mechanism and these were automatically eliminated by green rate devaluations over a period of up to four years. Under the new agrimonetary arrangements which came into force on 1 January, green rates are kept broadly in line with market rates, so monetary gaps are limited in size. Any gaps that are created by an ERM realignment will be reduced according to the rules of the new system: these are different for currencies within the narrow-band of the ERM and for other currencies but in both cases are designed to prevent the retention of monetary gaps in excess of two percentage points. The resulting green rate devaluations will increase CAP support prices.