-8-
11 of the Sterling Agreements, including a few negotiated since 1968,
empire in September 1973. A list of countries with which Agreements
are in force is attached at Annex B.
5. At the end of 1972 official sterling reserves under the terms of
the Agreements totalled £3.9 billion. This is a larger figure than
that for "exchange reserves in sterling" of OSA countries quoted in
paragraph A.2. above for two main reasons. Firstly, it includes
holdings of governments and their official agencies who are entitled
to the guarantee as well as central banks, currency boards and like institutions which are alone included in "exchange reserves in sterling
Secondly, it includes equities, Commonwealth stocks and certain other assets which by definition are excluded from "exchange reserves in sterling". On the other hand, not all OSA countries have Agreements (eg South Africa, Malta) so the geographical coverage of the Agreement figures is smaller. Sterling guaranteed at end-1972 was £3,085 mn. (ie £3.9 billion less the deduction mentioned in paragraph D4). In aggregate Agreement signatories held 52% of their overall external
reserves in sterling. Indeed, at end-1972 they held some £650 mn.
in excess of their obligations under the Agreements.
6.
The Agreements provide that the guarantee will be implemented if the sterling/US dollar rate remains for thirty consecutive days below £1 - US $2.3760 (ie the former 1% margin against the $2.40 parity allowed under the IMF Articles). Compensation in sterling is yable on those eligible balances which were held on the day before the thirty-day period began. It is calculated as the amount of sterlin required to make good the difference between $2.40 and the closing middle sterling/dollar rate in London on the last day of the thirty-day period. On the 23rd November 1972 the rate had been below the trigger rate of $2.3760 for thirty consecutive days; the closing rate was