STERLING
Financial and monetary issues
125. Following separate discussion with the member countries of the Community in the context of the negotiations, on 7 June 1971 the Chancellor of the Duchy of Lancaster made the following statement to them:
"I put on record at our meeting in May a number of statements which have been made on behalf of Her Majesty's Government on these questions. I would now like to add the following statement. We are prepared to envisage an orderly and gradual run-down of official sterling balances after our accession.
We shall be ready to discuss after our entry into the Communities what measures might be appropriate to achieve a progressive alignment of the external characteristics of and practices in relation to sterling with those of other currencies in the Community in the context of progress towards economic and monetary union in the enlarged Community, and we are confident that official sterling can be handled in a way which will enable us to take our full part in that progress.
In the meantime we shall manage our policies with a view to stabilising the official sterling balances in a way which would be consistent with these longer term objectives.
I hope that the Community will regard this statement as disposing satisfactorily of the question of sterling and associated matters, leaving only the arrangements for the United Kingdom's compliance with the directives relating to capital movements under the Treaty of Rome to be settled in the course of the negotiations."
126. The Six replied that the Community had taken note of this statement with satisfaction, and proposed that it should be the subject of an exchange of letters to be annexed to the Treaty of Accession.
127. In amplification of this exchange, the Prime Minister made the
following statement to the House of Commons on 10 June 1971:
·
*
sterling is not an issue in the negotiations but is a matter to be discussed in the context of the negotiations. So when it was raised by the Six earlier in the year we readily agreed to discuss it.
At The Hague in December 1969 the Community declared its intention of moving towards economic and monetary union. That raises understandable and proper questions, put to us in good faith, about the adjustments that might be required for a currency in an enlarged Community which had an appreciable role as an international reserve
currency.
We have said three things to the Community. We have said that as members of the enlarged Community we would play our full part in the progress towards economic and monetary union. That was confirmed in my talk with President Pompidou and in my statement to the House. We have said that we are prepared to envisage a gradual and orderly rundown of official sterling balances after our accession. We have said that after accession we would discuss measures by which a progressive alignment of the external characteristics of sterling with those of other Community currencies might be achieved.
32
і