TNAG-0717-FCO40-914-Banking-and-monetary-matters-in-the-Dependent-Territories-is-1978 — Page 128

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understand that some coins have been redeemed, but no details are

We do not believe that any form of reserve fund has been

available.

created.

8.13 (6) In Gibraltar and the Falkland Islands coins for normal circulation and for numismatic purposes are issued by Royal Proclamation under the UK Coinage Acts 1870 and 1946 and the Decimal Currency Acts 1967 and 1969, The Proclamations are chiefly concerned with detailing the specifications of the coins and giving them legal tender status. In contrast with the position for currency notes (for which there are separate local ordinances), there is no specific requirement to back coins, although in both territories, it is understood, steps have been taken to provide limited reserve funds for the coinage by increasing the investments held on behalf of the Note Security Funds (which hold 100% backing for notes). In 1968 £15,000 was placed in reserve in the Gibraltar fund to provide 25% cover for the commemorative issues. We do not know how this was financed. Since then no further

appropriations have been made, and the reserve fund is regarded as providing only token cover for any possible redemptions. The reserve

now represents less than 2% of outstanding numismatic issues. Despite earlier correspondence Gomez (Gib.Sec.) to Hyde (FCO) of 23.10.72, and Miss Glover (FCO) to Dowling (Royal Mint) of 13.5.777 suggesting that the Fund was to be maintained at a figure of approximately 25%, the reply to the questionnaire from the Gibraltar Secretariat reveals that they consider the full 25% is not only unrealistic, as, to date, no coins at all have been redeemed, but also defeats the object of

issuing numismatic coins.

8.13 (7) In the Falkland Islands a similar reserve fund has been

created but we do not know the sum involved. The Falkland Islands

Treasury's reply to the questionnaire states that "all coin issued both to dealers and that in circulation except proof sets is now backed". As over 70% of the coins are sold in proof sets the reserve fund would appear to total about £8,000. It is evident that the Treasury's attitude to the possibility of redemption of the proof sets is similar to that in Gibraltar. However, a draft Currency Ordinance is, we understand, under study by the Falkland Islands authorities. The current text implicitly requires full backing for all notes and coins and makes no distinction between circulatory and numismatic issues; but there is a provision for including the value of the bullion content of coins in the reserve assets. If these provisions were adopted, the future Commissioners of Currency would be required