§ Mr. Parkinsonasked the Chancellor of the Exchequer if he will explain the present arrangements for guaranteeing official sterling balances.
§ Mr. NottThe Sterling Agreements expired on 24th September.
My right hon. Friend sent a message on 6th September to signatories of the Sterling Agreements undertaking to continue to guarantee certain official sterling reserves for a further period until 31st March 1974. In broad terms, the guarantee will be available to holders who maintain in their reserves the minimum sterling proportions set for the purposes of their Sterling Agreements or who hold amounts obtained by applying those minimum sterling proportions to actual reserve holdings on 24th September. An upper limit to the amounts covered by the guarantee is set by reference to the level of holdings on 24th September.
The guarantee is given at a rate of £1 equals $2.4213, which is the average of the exchange rate at noon on the three working days up to and including 6th September. The guarantee will be implemented if the average of daily rates for sterling in terms of U.S. dollars throughout the six-month period is below the guarantee rate. Any settlement will be in sterling and the amount will he calculated on the basis of the difference between the guarantee rate and the average rate.