--4--
An
local currency through the banking systems into other currencies via sterling. The strength of the link varied with the degree of
monetary sophistication achieved in the countries concerned. important change in the structure occurred in November 1967 when sterling was devalued against the U.S. doller and a number of
member countries, including most of the larger sterling holders,
did not follow suit. The disturbed period following the 1967
sterling devaluation led to the negotiation in 1968 of the Sterling
Agreements described in more detail in Section D. The process of
change evolved further in the events leading up to the Smithsonian
Agreement in 1971 and again in 1972 when sterling floated and new
Exchange Control arrangements were introduced. Thereafter only
one important country India- retained a direct link with sterling.
The remainder relate their exchange rates primarily to the
U.S. dollar.
3.
G
Despite these changes, the OSA still keep about half their
official external reserves in sterling. Of the total official
holdings about 70% is held by six countries. The remainder is
spread over 50 more. The distribution of sterling balances is set
out in more detail in Annex A.
C. EVOLUTION OF THE STERLING BALANCES
1. Over 25 years to 1970 when the total was about £44 bn., the
total of the sterling balances showed remarkable stability, though
there were occasional short-term fluctuations.
however, the pattern of holders had changed.
Within the total,
As the wartime