§ LORD BARNBYasked Her Majesty's Government:
What, at December 31, 1972, was the total of deposits in United Kingdom the property of overseas Governments and what proportion of this sum attracts guarantee against devaluation and what is the percentage of the guarantee; further what notice of intention to withdraw is required?
THE LORD PRIVY SEAL (EARL JELLICOE)Exchange reserves in sterling held by central monetary institutions of all overseas countries totalled £3,343 million at end-December, 1972. At the same date sterling holdings guaranteed under the Sterling Agreements amounted to £3,085 million. These series are regularly published in the Bank of EnglandQuarterly Bulletin. Their coverage is not comparable. Not all overseas countries have Sterling Agreements: and the Agreements cover a wider range of assets than are included in the first figure mentioned.
As explained to the noble Lord on November 9, 1972, the guarantee was to be implemented if the middle sterling/U.S. dollar rate fell and remained throughout a period of 30 consecutive days below 2.3760 dollars (that is 1 per cent. below 2.40 dollars, which was the parity when the Agreements were made). This point was reached on November 23, 1972 when the closing middle sterling/dollar rate was 2.3506 dollars. As announced on December 4, 1972, the payments to implement the Agreements make good, on eligible balances, the differences between 2.40 dollars and 1189WA 2.3506 dollars, which is just over 2 per cent.
No notice of intention to withdraw sterling exchange reserves is required beyond what is usual for the particular type of asset concerned; but countries whose sterling holdings are guaranteed under the Sterling Agreements have an obligation to maintain an agreed percentage of their total reserves in sterling.