§ Mr. Austin MitchellTo ask the Secretary of State for Foreign and Commonwealth Affairs what are the implications of the Maastricht treaty for (i) the creation of credit, (ii) Government borrowing through ways and means advances and (iii) Government borrowing through the banks. [9797]
§ Mrs. Angela KnightI have been asked to reply.
Under article 105(2) of the EC treaty, the primary objective of the European system of central banks shall be to maintain price stability, and the basic tasks to he carried out through the ESCB include the definition and implementation of monetary policy of the Community, which would have implications for the creation of credit. As a result of article 109k(3) and protocol 11 there would no direct implications in countries not participating in the third stage of economic and monetary union.
Under article 104(1) of the EC treaty, central Governments are prohibited from having an overdraft facility or any other credit facility with the European central bank or with the national central banks. However, article 11 of protocol 11 annexed to the EC treaty makes clear that, notwithstanding article 104, the United Kingdom may maintain the ways and means facility with the Bank of England, if and so long as the United Kingdom does not move to the third stage of EMU. If the United Kingdom were to participate in the third stage of EMU, the Government would be unable to maintain the Ways and Means facility.
Under article 104a(1) of the EC treaty, public authorities are prohibited from establishing "privileged access" to financial institutions. This provision is already in effects and the United Kingdom is in compliance. There are no other treaty provisions directly concerned with the ability of central Governments to borrow through banks.
Under protocol 11 annexed to the EC treaty, the United Kingdom shall not be obliged or committed to move to the third stage of economic and monetary union without a separate decision to do so by the Government and Parliament. We will agree to take part in a single currency only if it is in our national interst to do so, given the circumstances at the time.