Join the new world

The current benchmarks that the Treasury have been pursuing are becoming outdated. The marks of 1 GOLD = 38.5 GBP and 1 GBP = 0.027 GOLD, while stable, do not reflect the potential of our economy. While we have been fighting a general rise in the value of the Pound in recent months, I, along with a few others, are beginning to see some merits in actively pursuing the devaluing of the Pound.

Why will this be beneficial? In some ways, it won't be beneficial in the short term. The economy will destabilize to a certain extent if we begin pursuing a different aim. Over time, however, we should have a gradual rise in the average wage (most citizens don't bother and do the GBP to GOLD conversion in their head, they just see that they can get better wages elsewhere, and thus we lose workers). We do not need to devalue enough that prices will raise beyond the point of keeping business profitable, but I think we can do it without causing this. Devaluation would also match us up more equally with countries in similar states of raw material disbursement, as they are typically around 1 CURRENCY = 0.020, with us at 0.027. This makes it more difficult for our companies to export because we have higher relative costs at home, thus making us more relatively competitive. Thus, devaluation should encourage British workers to stay in British jobs, and it should encourage British companies to export abroad. I think we can all agree that the domestic business market is much too crowded, and getting some of that abroad couldn't hurt.

To pursue devaluation, I propose a different mechanism for maintaining our exchange rates. Currently, we buy up all offers below G=38.5 and GBP=0.027 immediately, and hold hard and fast to those numbers. This is not as expensive as it used to be, but still represents a lot of effort on the part of the Treasury without much gain. No change... stagnation... no growth... it's no good. It is time to seek greener pastures. I hereby introduce and recommend a policy that derives itself from the real world "Snake in the Tunnel" that the EEC attempted some years back.

The treasury have set new benchmarks, at:

1 GOLD = 40 GBP
1 GBP = 0.026 GOLD

This represents a devaluation of 3.9%, and it will also maintain the 4% bias built into the benchmarks to aid in currency trading. We will then allow the exchange rate to fluctuate in response to the market positively or negatively with a +-5% band, meaning the Treasury will only intervene if the going rate attempts to breach 1 GOLD = 42 GBP or 38 GBP, or 1 GBP = 0.025 or 0.027 GBP. Official government business will be conducted using the target rates of 40 and 0.026. We should see, then, a rise and fall with the markets within these parameters. They are rather narrow at the moment, but the idea is that we can expand and contract the barriers, and we can also slowly shift the value of the pound up or down, to meet the demands of the economy. This should allow the Treasury and the British economy to become more more fluid and responsive to changes in the market.

For the next few days after the devaluation, the Treasury will hold values steady at 40 and 0.026, and then we will commence letting it float within the tunnel when the markets get used to it.

Thank you,
Arthur Wellesley - Chancellor of the Exchequer
Archerstorm - Under Minister of Finance