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and at the same time provide a hidden reserve for
the issuing authority on the assumption that wholesale
redemptions remain unlikely.
(e) Provide for some cover against redemption but
less than 100%
This course relies on an assessment of
acceptable risk and while there was not enough
evidence from actual redemptions it was estimated
that a figure of 70% might be reasonably satisfactory
where it has not been possible to achieve the full
100%.
(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 very considerably
lower than face value, and even when combined with
the royalties it would be inadequate to provide
full cover. For this recommendation to be effective
accurate records would need to be maintained
detailing the numbers of coins minted with
particular specifications.
(g) Renunciation of redeemability
A radical course which would be a complete break
with the traditional style of currency issue
in the dependencies. The immediate problem arising
from this course would be its implications for
existing coins of both types and for the rights
of convertibility/redemption attaching to them.
It would be inequitable to remove existing rights.