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(f) Inclusion of bullion content as backing asset
A partial remedy to achieve the 100% backing would be to allow
for the inclusion, as an asset in the issuing authority's balance
sheet, of the bullion content of the coins. However, in the
case of those programmes which give most cause for concern the
bullion value is considerably lower than face value, and even
when combined with the accumulated royalties it would be
inadequate to provide full cover. Moreover, for this proposal
to be effective, accurate records would need to be maintained
detailing the numbers of coins minted with particular
specifications.
(g) Renunciation of redeemability
The
A radical course which would be a complete break with the
traditional style of currency issue in the dependencies.
immediate problem arising from this course would be its
implications for existing coins and for the rights of
convertibility/redemption attaching to them it would be
inequitable to remove existing rights without an adequate interim
period (see h below). However, on the assumption that existing
rights were unchanged and that the proposal applied only to
future issues, it would serve to limit (once for all) the risks
accepted by those issuing authorities that cannot or will not
maintain adequate backing. It could also relieve HMG from any
increase in its contingent liability. It does not imply that
currency authorities now adequately covered must adopt the new
arrangement; but it might well encourage some to make a change
in order to increase their income.
(h) Removal of legal tender status and demonetisation
This course would relate primarily to existing coin issues though
it would necessarily apply to future issues too. Its main
objective would be to limit convertibility/redeemability by