asked the Minister for Finance if it is the view of the Government that the Irish pound need not be backed by British Government securities up to 100 per cent. of the note issue, and, if so, what is considered by it as the desirable percentage; and when it is proposed to permit assets, other than British Government securities, to be held in the Legal Tender Note Fund of the Central Bank.
Ceisteanna—Questions. Oral Answers. - Backing for Irish Pound.
Under the law as it stands, the Irish pound need not be— and is not—backed by British Government securities up to 100 per cent. of the note issue. The capital of the Legal Tender Note Fund may be invested, at the discretion of the Central Bank, in any of the forms set out in Section 61 (3) of the Currency Act, 1927, as amended. These include gold, British Government securities and also the currency and securities of the Federal Government of the United States of America. As regards the admission to the fund of other forms of assets I would refer the Deputy to my reply to his question on the 5th November, 1958, in which I stated that the initiative in the matter of admitting fresh forms of assets to the Legal Tender Note Fund is statutorily vested in the board of the Central Bank of Ireland. I would also refer the Deputy to the following extract from paragraph 137 of the Programme for Economic Expansion:—
"Subject to the preservation of long-term equilibrium in the balance of payments, financial policy will... favour the application of all available resources to productive home purposes. If there should be any scarcity of home capital for productive development, it would be in accordance with this policy that future issues of legal tender notes should not involve an addition to the external reserves of the Central Bank.”