}
draw dollars or other foreign currency from the BIS to the extent
that gross sterling balances of the OSA, both official and private,
fell below £3,080. (which was the basis for the First Group
Arrangement of June 1966). Concurrently with renewal of the Sterling
Agreements to September 1973 the facility was extended to enable the
UK to be eligible to draw until September 1973 and the repayment
schedule was correspondingly lengthened. Drawings were not available
to finance either UK balance of payments deficits or falls in NSA
balances. The amount available was $2,000 mn. which could be drawm
over 3 years and repaid over 10 years (with five years' grace).
Sterling Agreements
The UK has Sterling Agreements with fifty-six independent
countries and dependent territories and with five currency boards.
Under these Agreements each signatory agrees to maintain a minimum
proportion of its total reserves in sterling in return for a guarantee
of the US dollar value of the major part of signatories' sterling
balances at the rate of US $2.40 - £1, the parity when the Agreements
were originally signed in 1968. (More precisely, the guarantee is
on total sterling reserves less 10% of total reserves or sterling
equities held, whichever is the greater.) The minimum sterling
proportions (MSP's) which each signatory must maintain were ly
based on the actual composition of their reserves in 1968.
of the Agreements (including those with most major signatories) were
signed initially for 3 years. When these were extended for a further
two years in September 1971 a 10% all-round reduction of MSP's was
made (eg an MSP of 50% became 45%). Actual MSP percentages for
individual Sterling Agreement countries are confidential between the
UK and the signatory, though some countries have published their MSP
:
eally
About half
a4
?
A