STERLING
11. WHAT ARE TOTAL HOLDINGS OF STERLING? HOW MUCH HAVE THEY, RISC
! THIS YEAR? OFFICIAL STERLING RESERVES TOTALLED SOME £4700 M AT END-SEPTENG! IN ADDITION, BANKING AND HONEY MARKET LIABILITIES TO OVERSEAS PRIVATE HOLDERS AMOUNTED TO SOME £2500M. THESE TOTALS HAD RISEN BY SOME £1900M AND £200 M RESPECTIVELY SINCE THE END OF 1973, THERE IS NO LINK BETWEEN THESE RISES AND THE EXISTENCE OF THE GUARANTEE SINCE THE LATTER HAS NOT APPLIED TO INCREASES IN RESERVES. 12. HAS THE ABANDONMENT OF GUARANTEES REMOVED A'FLOOR' FROM THE EXCHANGE RATE?
NO. THE GUARANTEES ARE BEING DISCONTINUED BECAUSE THEY HAVE BECOME OUTDATED AND OVERTAKEN BY EVENTS.
13. IS THE RECENT RISE IN HOLDINGS OF STERLING BY THE OIL PRODUCERS
WELCOMED?
CERTAINLY, BECAUSE IT IS PLAYING A MAJOR ROLE IN FINANCING THE PAYMENTS DEFICIT.
14. HOW DOES THE ENDING OF GUARANTEES AFFECT STERLING'S ROLE AS A RESERVE CURRENCY?
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THE RELEVANCE OF THE GUARANTEES HAS NOW DIMINISHED TO SUCH AN EXTORT THAT THEIR DISCONTINUATION HAS NO PARTICULAR IMPLICATION FOR THE ROLE OF STERLING AS A RESERVE CURRENCY. POLICY AND PROSPECTS
I
15. HOW HAVE PARTICIPANTS REACTED TO THE DECISION TO END GUARS" IT HAS BEEN GENERALLY RECOGNISED THAT THE GUARANTEES WHICH HAVE EN
HAD LOST MUCH OF THEIR COVERED ACCUALS AFTER SEPTEMBER 1973 RELEVANCE. WE EXPECT THE MAIN STERLING HOLDERS TO CONTINUE TO HOLD SUBSTANTIAL AMOUNTS IN STERLING.
1.
16. DO YOU EXPECT PARTICIPANTS TO DIVERSIFY? DISCONTINUANCE OF THE GUARANTEE IS MOST UNLIKELY TO LEAD TO ANY NET DIVERSIFICATION OVERALL, THOUGH THERE MAY OVER A PERIOD BE SOME MARGINAL ADJUSTMENT IN THE POSITION OF INDIVIDUAL HOLDERS. OIL-CONSUMING COUNTRIES WHOSE RESERVES ARE UNDER STRAIN AND MO HAVE TAKEN FOREIGN CURRENCY LOANS WILL NEED THE POSSIBILITY OF SOMEWHAT GREATER FLEXIBILITY IN THE MANAGEMENT OF THEIR EXTERNAL. RESERVES.
3
}
17. WHY NOT