sterling funds

Greymouth Evening Star, 31 July 1946, Page 8

sterling funds

BALANCES HELD IN BRITAIN MAY BE REDUCED

SEQUEL TO AMERICAN LOAN

[N.Z.P.A. Special Correspondent.]

LONDON, July 29. Arrangements for refunding sterling balances are seen by the Financial Times as being the next step now that the American loan to Britain has been granted. These balances are £3,500,000,000. Arrangements made for shipping goods to meet the obligations will have repercussions on the task facing British industries of recovering or retaining many of their most important overseas markets.

Remarking that certain governments holding sterling balances will undoubtedly try, under pressure of public opinion in their own countries to hold out for the stiffest terms they can secure, and will not be inclined to yield readily to arguments by British negotiators in favour of scaling down, the Financial Times says there are strong feelings both in British political and business circles against a settlement of sterling balances on unduly generous terms.

“It is gratifying,” the article states, “that the Government is maintaining a firm position in discussing the terms of settlement of Argentinian sterling balances. The argument is turning mainly on the question of interest, and Britain has refused to consider consolidating the balances on 271- per cent. “It is particularly important, however, that countries holding sterling balances which themselves are within the sterling area should realise that their position differs fundamentally from that of the Argentine. In almost every instance their holding of sterling is considerably in excess of British claims and investments in their respective countries. “It is very much in their own interest to put Great Britain, into a position to meet her liabilities by agreeing to reduce their claims to a reasonable figure. “That Britain should be _ able to recover her-full strength with anything like the full burden of £3,500,000,000 sterling round her neck is utterly inconceivable.”

The article adds that there should be no question of Britain parting with a large proportion of dollar reserves in return for the 'scaling down of sterling .balances, and it was to be hoped that the Government would not consent to a large-scale liquidation of British investments abroad in settlement of sterling balances. MENTION IN BUDGET PROBABLE (P.A.) WELLINGTON, July 30. When the comment of the ‘Financial Times on sterling balances was referred to the Minister of Finance (Mr. Nash) lie said the effect of the United States loan to Britain, sterling balances, debtor and creditor countries, and in particular the position of the United Kingdom at present would have to be given special, consideration within the next few months. It was probable that some reference would be made to the matter when the Budget was presented to Parliament.