HM Treasury News Release
112/97                                       22 September 1997
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   CHANCELLOR ANNOUNCES NEW OPEN POLICY ON OFFICIAL RESERVES


A new policy of openness on the UK Government's gold and
foreign exchange reserves has been announced by the Chancellor
Gordon Brown.

Addressing the International Monetary Fund (IMF) Interim
Committee in Hong Kong, the Chancellor said he would publish a
new quarterly report on foreign exchange operations, which
would include the UK's forward foreign exchange position. He
would also be publishing an annual set of accounts.

The Chancellor said:

     "Most governments, including my own, have maintained a
     veil of secrecy over official forward exchange
     transactions. This can mean that markets have incomplete,
     and sometimes quite misleading, information about a
     government's foreign exchange reserves and the scale of
     intervention that has been undertaken.

     "Today, I want to announce an end to all that. Full
     information on our outstanding forward position will be
     published - with a short delay - in a quarterly report.
     And full accounts of spot and forward positions will be
     published annually. So we are literally opening up the
     books."

NOTES TO EDITORS

1.   The full text of the Chancellor's speech to the IMF
Interim Committee is available to the media from the Treasury
Press Office on 0171 270 5185. Other copies of the speech are
available from the Treasury Public Enquiry Unit on 0171 270
5448.

2.   The UK's official gold and currency reserves are held
under Treasury control in the Exchange Equalisation Account
(EEA). The Bank of England acts as the Treasury's agent in the
foreign exchange markets.

3.   The Treasury currently publishes the gross level of
official reserves on the second working day of each month,
along with the change in reserves taking account of foreign
currency capital transactions. The Bank of England publishes a
monthly breakdown of the gross reserves and public sector
foreign currency liabilities on a monthly basis with a three
month lag, in Monetary and Financial Statistics.

4.   None of these figures include transactions or outstanding
positions in the forward foreign exchange market. Forward
foreign exchange transactions are agreements to buy or sell
foreign currency for sterling at a fixed rate at a specified
time in the future. Buying and selling in the forward market
has an indirect impact on spot exchange rates and carries the
same currency risk as ordinary spot market intervention.

5.   By revealing its forward positions, the Government will
show for the first time the true extent of its intervention in
the foreign exchange markets and its outstanding foreign
currency assets and liabilities. The new report will be
published around two months after the end of each quarter and
will include a commentary on market developments, and a
breakdown of reserve assets and liabilities on a consistent
basis, including forward positions.

6.   The decision to publish with a short lag ensures that the
market gets a full report covering all the relevant
information and that the authorities do not shy away from
appropriate policy action because of short-term concerns.
Similar arrangements are in place for the Bank of England's
new Monetary Policy Committee, which publishes full details of
its discussions up to six weeks after each meeting.

7.   A full set of annual accounts for the EEA will also be
published, to bring the reserves up to the same high levels of
accountability and transparency that apply to other UK
government accounts.

8.   Few other countries publish their forward foreign
exchange positions. Examples of some that do are Sweden and
Hong Kong, both of whom publish monthly details of their
forward positions, and the US which publishes quarterly
details of its outstanding foreign currency swap positions.  

9.   This move to increase openness and transparency builds on
previous initiatives which provide greater openness in
monetary and fiscal policy making: the publication of MPC
minutes, the open letter system, the auditing of public
finances by the National Audit Office and the forthcoming
Green Budget.