CURRENCY WAR IN WESTERN EUROPE

Author: M. Petrov

CURRENCY WAR IN WESTERN EUROPE

The rapid increase in the strength of West German monopoly capitalism in industry and trade as com_

page 94

WORLD EVENTS 95

pared with its French and British rivals has recently led to sharp conflict in the financial field.

It is a characteristic feature of the present situation that the foreign currency resources of France and Britain are extremely low, while those of West Germany are extremely high and that the franc and the pound are regarded with rising distrust on the international capitalist money market.

According to press reports, France had by the beginning of August exhausted the $262,500,000 loan received from the International Monetary Fund last autumn, run through the reserves in the stabilization fund, accumulated a deficit of more than $2,000 million with the European Payments Union, and was being forced to draw on the reserves of the Bank of France. On August 10, the French Minister of Finance said that because of the drain on French foreign exchange reserves the overhaul of the foreign trade system had become urgent and inevitable and announced measures that were tantamount to a 20 per cent devaluation of the franc.

The position of the pound is also serious. Rumours of its devaluation were so strong that the Treasury had to issue an official denial on August 19. Gold and dollar reserves had fallen by $225 million (or about £80 million) in August and stood at $2,142 million (or £765 million). There was an even greater drop of $292 million in September, which reduced reserves to $1,850 million, the lowest level since 1952.

On September 13, the Treasury stated that as a result of recent transactions Britain's indebtedness to the European Payments Union had increased by other £14 million to the great sum of £126,449,286. Later figures showed that this indebtedness had further increased' during September, necessitating a further ...

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