TNAG-0717-FCO40-914-Banking-and-monetary-matters-in-the-Dependent-Territories-is-1978 — Page 16

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of coins, resulting from a deterioration or even collapse in the bullion

and/or coin collectors' markets, the territories might be unable to

meet an implicit or explicit obligation to redeem the coins by payment

in an external currency, and HMG could thus be placed in a position of

having to meet a territory's resultant deficiency.

In addition certain developments in the Caribbean and Pacific

areas had revealed the vulnerability of some local administrations when

confronted with the high pressure sales techniques adopted by some coin

promotion companies. The UK Overseas Territories offered attractive

outlets through which companies could supply the fast-growing market

for new coins and there was also a degree of exploitation of the

dependencies' "royal" connection.

Summary of conclusions.

dependencies.

Attached at Annex II is a list of

the promotional companies who normally supply numismatic coins to

For the purposes of the Report the firms at Nos. (1) to

(5) will be understood to mean the "US promotional companies" and (6)

to (7) "UK companies".

There are fundamental differences between the US and UK types

of contract, revealed primarily in the treatment of royalty payments,

distribution limits, specifications and the policy adopted towards

formalised contracts - the US companies usually request a 5-year

contract requiring annual issues: the UK companies conclude less

formal agreements for single issues.

The UK

The approach adopted by Spinks and the Royal Mint appears

preferable in that the risk to the client is minimised.

companies generally limit the issue to a relatively small, predetermined

number. Royalty payments exceed the face value of the coins and the

intrinsic value is high. As a result, even where royalties are less

than face value, the combination of royalties and the calculation of

the bullion value, which may ultimately be regarded as an asset of the