The purpose of the Bill is to continue the Exchange Control Act, 1954 in operation for a further period of four years. The necessity for exchange control in Ireland arises from the restrictions on the convertibility of sterling which have been in force to a varying degree since 1939. Normally Ireland achieves a balance of payments surplus with the sterling area and a deficit with the non-sterling area. Up to the outbreak of the war, she could freely use her surplus earnings of sterling, or draw on her accumulated reserves of sterling to finance her deficits with the non-sterling world. The restrictions on the convertibility of sterling have made it necessary for us to control our payments to and receipts from non-sterling countries.
Exchange control was first operated under emergency legislation which was replaced in 1954 by the Exchange Control Act. The Act was expressed to expire on 31st December, 1958, as it was hoped that the need for exchange control might pass by that date. This has not proved to be the case.
In general, the Act provides for the control of payments to and receipts from countries outside the sterling area and the control of transactions which might be the means of making unauthorised payments to such countries. Transactions of this type include dealings in gold and foreign exchange, dealings in foreign currency securities and in unregistered sterling securities, dealings in sterling securities on behalf of persons resident outside the sterling area, the export and import of currency notes and the export of goods to countries outside the sterling area. To facilitate the control of dealings in foreign currency securities and in unregistered sterling securities, the Act continues the powers given in the emergency legislation to require the deposit of such securities. While it has not been necessary to bring these latter powers into operation since 1954, it is desirable that they should be retained lest the need for them should arise again.
In recent years the control has been considerably relaxed and at the present time all classes of payments of a non-capital nature are authorised in full, with the one exception of expenditure on holiday travel outside the sterling area where there is a limit of £100 per adult per annum. Also, the procedure required to be followed by persons making transfers to countries outside the sterling area has been simplified to a large degree. General exemptions and permissions have been granted by Ministerial Regulations and by notices to the public. Authority has been delegated to banks to deal with a wide range of applications without reference to the exchange control. Furthermore, the amount of form filling has been reduced by dispensing with the completion of exchange control forms for most outward payments not exceeding £250 in value and in the case of the control of payments for exports for consignments not exceeding £500 in value.
Unfortunately, it is still necessary to restrict transfers of capital to countries outside the sterling area, but in this sector also it has been possible to effect a considerable simplification of the procedure, by delegating authority to banks and authorised travel agencies to deal with emigration applications and to banks, stockbrokers and solicitors to handle most classes of permitted transactions in securities.
It is impossible to say how long it will be necessary to continue exchange control in operation in this country. In recent months there have been indications that sterling convertibility on current account may not be too far away, but I am afraid that there are no grounds for hoping that convertibility on the capital side is in sight. We must always be prepared for the possibility that a setback in the recovery of sterling might undo the progress which has been made and oblige member countries of the sterling area to tighten their exchange restrictions. For these reasons it is necessary that the Act should be continued. The Bill proposes an extension of four years but, of course, if full convertibility of sterling, both on capital and current account, is achieved at an earlier time, action will be taken to abolish exchange control without delay.
