Revaluing Gold The main purpose of the Currency and Bank
Notes Bill, which passed its second reading this week without a division, is to revalue the assets, gold and securities which back the Bank of England note circulation. Hitherto the reserve has been reckoned at the old statutory price of 85s., even though gold at its present market price is worth over 148s. an ounce. There is now to be a weekly valuation, and the Bank's gold reserve will be written up to the current market price. If there is any discrepancy between that figure and the amount of notes outstanding it is to be remedied by a weekly adjust- ment between the Bank and the Exchange Equalisation Account, which is thus going to become a sort of Currency Management Account. The Bill marks in fact a long step forward towards a " managed " currency. The mechanism whereby it will be possible to avoid fluctuation in the cur- rency consequent on fluctuations in the market price of gold is ingenious; the Bill as a whole is approved by the City.
Previous page
