- 6 -
(3)
The problem of redemption would probably occur sooner for
specimen coins which are usually issued initially at or near face value,
than for proof coins which are normally sold at well above face value.
An issuing authority may be faced with two main problems in
One is that coins will be
respect of its numismatic programmes.
It is clear
But
returned to their country of origin to be used as legal tender, thereby
increasing the money supply. The other, and greater risk is that they
will be returned to be redeemed for external currencies.
that all issuing authorities have a moral obligation, if not always a
precise legal one, to redeem their numismatic coins at face value.
this liability carries no risk for the issuing authority if it has
foreign exchange assets available which are equivalent to the coins
presented. If such assets are insufficient a risk has been accepted.
Considering the position of the dependencies overall, it is evident that
the total liability at end-1976 stood at about $35 mn. Against this
there is specific cover of only $2 mn., about 6%, and the liability is
increasing.
RECOMMENDATIONS
In view of the unpredictability of the market, the large
fluctuations in annual receipts, with the resulting difficulties in
providing accurate budget forecasts, there is a danger of placing too
much reliance on this particular source of revenue and also of becoming
too dependent over a period of several years on a single foreign
commercial enterprise.
If, however, moderation is shown in the
regularity and volume of issues, the market may continue to be a useful
source of revenue.
The primary need is to minimise the risks, and to this end all
Governments should submit for scrutiny by HMG draft contracts and
proposals for individual programmes well in advance of any deadlines that
may have been imposed by the promotional companies. Closer involvement
by HMG would also help to ensure that nothing is done to damage the