TNAG-0717-FCO40-914-Banking-and-monetary-matters-in-the-Dependent-Territories-is-1978 — Page 98

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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. (This concept is discussed more fully in Sec. 7). The discovery that two territories

alone (the Caymans and the Turks and Caicos) had outstanding liabilities

in respect of numismatic coins which totalled about US$19 mn. at

end-1975 drew attention to HMG's contingent liability: as in some

sense the ultimate guarantor of the dependencies' financial liabilities,

HMG would presumably be required to meet any deficiency should a territory be unable to meet its redemption obligations.

3.3

In both the Caribbean and the Pacific dependencies, certain developments had revealed the vulnerability of local administrations when confronted with the "high pressure" sales techniques adopted by some coin promotion companies. It was apparent that, for a number of reasons, the dependent territories offered attractive outlets through which the companies could supply the fast-growing market for new coins

(see Sec.5). There was also, on the face of it, a degree of exploitation of the dependencies' "royal" connection.

3.4

It was accordingly agreed that a survey of dependencies'

numismatic coin issues should be conducted in order

(a) to compare the individual territories' contracts and

commitments, drawing attention to their main features and identifying any unsatisfactory aspects;

(b) to quantify the total liability for the issuing

authorities (governments or, where applicable, central monetary institutions), and to assess its implications, including that of any contingent liability for HMG;

(c) to identify and assess courses of action, which, if

adopted, would be likely to minimise or correct any unsatisfactory or dangerous features in existing practice in respect of these issues.

4. CONDUCT OF SURVEY

4.1

The survey was based upon the answers to a questionnaire (Annex 1) sent to the following territories, which, it was understood,

had at some time been involved in the issue of numismatic coins (or

discussions about an issue): Belize, Bermuda, BVI, Cayman Islands, Falkland Islands, Gibraltar, St. Helena, Solomon Islands, and Turks and

Caicos Islands. We appreciate the trouble taken by the authorities