Treasury to strengthen the defensive powers of the British Equalization Account met with a generally favourable reception here yesterday.
It was pointed out by authoritative City circles that the Fund may marshal the gigantic amount of £450,000000 sterling, which is considered ample to meet any possible contingency.
It is hoped that foreign speculators will realize that the new measure is in no way inflationary, as it does not affect the increase in note circulation. Moreover, it is pointed out, the Bank of England's gold reserve, as valued at the present market exchange rate, still stands at £230,000,000 sterling.
Alhough it is impossible to estimate accurately the amount of foreign exchange balances still maintained in London, there is no doubt that even in the unlikely event of withdrawals of foreign funds continuing at their recent heavy rate, the authorities would be equipped to check the adverse effects of such movements for about two years.
Moreover, it is stated, a considerable portion of foreign balance represents actual gold held here in safe custody, end their transfer should not affect the foreign exchange position. It is emphasized that the measure of defence for sterling in no way constitutes the imposition of exchange control.—Reuter.
Netherlands Believed Ca-operating Amsterdam, Jan. 8.
Although nothing has yet been decided with regard to the Netherlands attitude towards the British currency defence move, it is considered certain that Holland will no refuse to cooperate to check a speculation against sterling.
Newspapers point out that Britain's intention to defend stofing is "of the greatest significance to Holland." The sterling level, it is stated, is a very important factor to Netherlands shipping companies operating to plantations in the Netherlands East Indies, who calculate their prices in British currency.
The recent weakness, financial circles here stress, has already unfavourably affected Nertherlands business.—Reuter.
Text read from the printed page and cleaned; old type leaves the occasional error.