38.
9. CONCLUSIONS
9.1
These may be set out under the following headings:
(1) The character of the contracts which the dependencies have
made with the various promotional companies.
(ii) The present state and future prospects of the numismatic
coin market itself and how, at the worst, the market might
decline.
(iii) The liability or risk of the issuing governments or currency authorities in the dependencies that results from the redeemability of numismatic coins in external currencies.
(iv) The contingent liability for HMG arising from their implicit
guarantee of dependencies' indebtedness.
(v) The nature of other risks or disadvantages inherent in
numismatic coin issues as at present managed.
(vi) The ways in which liabilities to redemption would be likely
to arise, in the event of a decline or collapse of the
numismatic coin market.
The Contracts
9.2(1)
The distinction in approach between the US promotional companies and, in particular, the Royal Mint, is apparent in most aspects of the numismatic market covered by the survey. It is shown primarily in the treatment of royalty payments, pricing, distribution limits, specifications and the policy adopted towards formalised
contracts.
9.2(2) The approach adopted by the Royal Mint has been shown to be for the most part more favourable to the client, with one overriding exception. If we set aside such factors as the relative quality of the finished product and the ability to meet delivery dates, a significant factor in persuading many dependencies to contract with the US companies rather than with the Royal Mint appears to be these companies' control of the North American market, and thus their ability and willingness to mint large quantities of coins. Consequently, a territory's total earnings as forecast by the US companies are normally much larger than those estimated by the Royal Mint.
9.2(3)
From a prudential stand-point, however, particularly when the redemption liability of the issuing authority is taken into account, the practice adopted by the Royal Mint appears preferable. In general,