CUND
OF THE
ANCELLOR
EXCHEQUER
1
Election since this would leave it too near the expiry
date; speculation about the possibility of there being
no guarantee will grow and could be damaging to
sterling.
4. I would much like to get rid of guarantees
altogether; they are a very expensive way of borrowing.
But faced as we are with an exceptionally difficult year,
I do not believe that this is the time to do so. With
all the present uncertainties, and bearing in mind the
difficulties which most sterling holders would in any
case have about committing themselves far ahead, I think
that the right course now is to extend the guarantee for
a further period of 9 months until the end of the year.
5. The extension can be done, as before, by a
unilateral declaration by IMG. No negotiations will be
involved. The structure of the new guarantee will be
similar to the present arrangement, but I have in mind
one or two modifications which should reduce the potential
cost of the arrangements.
6. Thus I propose to provide for a reduction in the
amount of sterling that participants need to hold in
order to qualify for the new guarantee. This will be
attractive to most holders, and should reduce the amounts
on which we have to make guarantee payments.
}
CONFIDENTIAL
17. In addition,