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redemptions, or whether one territory will be more severely affected than another. However, it seems reasonable to expect that coins forming part of a relatively small issue will retain a certain rarity value which would not be true of the generally large, subscription basis, issues. The value would also be dependent upon whether the coins had a genuine commemorative purpose and were well-designed, and were thus attractive in themselves as numismatic items, or whether the initial sales had resulted primarily from intensive marketing techniques.

Liabilities

9.4(1)

There are two possibilities. The first is that coins will be returned to their country of origin to be used as legal tender. The second, and underlying risk, is that they will be returned to be redeemed for (= converted into) external currencies.

9.4(2) It seems clear that all the issuing authorities (except perhaps Bermuda) have a moral obligation, if not always a precise legal one, to redeem their numismatic coins at face value. But this liability carries no risk, other than as described in Section 9.4(8), for the issuing authority if it has foreign exchange assets available which are

equivalent to the coins presented. If such assets are insufficient,

Territories

then, whatever way we look at it, a risk has been accepted. in this position may in the event turn out to be justified in taking the risk, but it nevertheless remains one.

9.4(3) Of the dependencies considered in the survey, the Gilbert Islands (which have issued no coins yet), Tuvalu and the Cayman Islands are in our view legally required to hold assets against numismatic

coin issues. The Cayman Islands Currency Board have set aside the

royalties received as a form of backing, but it constitutes only about 14% of the outstanding liability. (The few redemptions so far have been met as expenditure.) No such requirement applies to Bermuda, though they have nevertheless backed their ordinary circulation coinage. In Gibraltar there is a provision for a reserve fund for numismatic coins not in general circulation, but the practice of

providing backing has in fact been suspended. In the Solomons

legislation has been recently amended to remove numismatic coins from the definition of demand liabilities: this removes the obligation to

provide backing for this category of coins, but not the liability to

redeem them. The position in Belize is not clear, as the Monetary

Authority's statement of assets and liabilities does not indicate the

treatment given to numismatic coins.

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