Currency Reserve

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The Authority shall, at all times, maintain a Currency Reserve which shall consist of external assets and local assets.

The external assets referred to in subsection (1) —

shall be in value not less than an amount equivalent to ninety per cent of the demand liabilities of the Authority; and

shall consist of all or any of —

gold coin or bullion;

notes and coins, in such currencies as may be approved by the board;

money at call and deposits with such banks and in such countries as may be approved by the board;

treasury bills maturing within one hundred and eighty-four days issued by such foreign governments as may be approved by the board;

marketable securities issued or guaranteed by such foreign governments or international financial institutions as may be approved by the board and maturing within ten years;

marketable securities issued by such government agencies as may be approved by the Cabinet on the recommendation of the board; and

such other securities and investments not exceeding twenty-five per cent of the value of the Currency Reserve assets as may be authorised by the Cabinet on the recommendation of the board.

An amount equivalent to not less than twenty per cent of the demand liabilities of the Authority shall, at all times, be held in liquid form, that is to say it shall be held in Treasury bills issued by such governments as shall be approved by the board, or may be lent out at call or for short term to such banks as may be approved by the board, or invested in such readily realisable securities as may be approved by the board.

The local assets referred to in subsection (1) shall be in value not less than the difference, if any, between the amount of its total demand liabilities and the value of external assets specified in subsection (2).

The local assets shall consist of money at call or on deposit with such Class "A" banks as may be approved by the board.

The total of the value of the local assets referred to in subsection (5) shall not, at any time, exceed ten per cent of the demand liabilities of the Authority.

If, at any time, the total assets of the Currency Reserve shall be less than one hundred per cent of the demand liabilities of the Authority, such deficiency shall, so far as possible, be met by transfer from the General Reserve and, to the extent that such deficiency is not thereby removed, it shall be a liability of the Government, and the Government shall appropriate such funds from the general revenue of the Islands as are required to extinguish such deficiency.

The Currency Reserve shall only be used for the compliance by the Authority with its obligations under section 25(1) and the assets of the Currency Reserve shall be segregated from all other assets of the Authority and not be chargeable with any liability arising from any other business of the Authority.

For the avoidance of doubt, it is hereby declared that the assets of the Currency Reserve shall not be the subject of any order for injunction, attachment, execution or similar order in any proceedings before any court or tribunal.

Defined Terms

Currency Reserveexternal assetslocal assetsdemand liabilitiesGeneral Reserve

Cross References

Section 25 of Monetary Authority Actexternal
Currency Reserve used for compliance with obligations under section 25(1)

Monetary Authority Act

8 Parts