Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

UNITED KINGDOM

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of February 28, 2007)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: February 15, 1961.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)On February 27, 2007, the authorities notified the IMF that pursuant to mandatory UN Security Council regulations and relevant EU regulations, financial sanctions are in place against Al-Qaida, the Taliban, and individuals, groups, and organizations associated with terrorism; individuals and entities associated with, engaged in, or providing support for the Democratic People’s Republic of Korea’s nuclear-related, other weapons of mass destruction–related, and ballistic missile–related programs, or the Islamic Republic of Iran’s proliferation-sensitive nuclear activities or development of nuclear weapon delivery systems; individuals and state-owned entities of the former government of Iraq; certain persons associated with the former government of Liberia; persons considered to be a threat to peace and reconciliation in the Democratic Republic of the Congo, Côte d’Ivoire, and Sudan; and persons considered by the UN to have been involved in the assassination of former Lebanese Prime Minister Rafik Hariri. In accordance with the sanctions, it is an offense to make funds or economic resources available to or for the benefit of the designated targets of these sanctioned regimes and anyone acting for or on behalf of those targets. Funds and other financial assets and economic resources of the designated targets are frozen. The targets are designated by the relevant UN Sanctions Committee, except in the case of terrorism, where EU or domestic designation is required. In addition to UN sanctions, there are also a number of EU-based financial sanctions of regimes pertaining to Myanmar, the former government of the Federal Republic of Yugoslavia, the International Criminal Tribunal for the Former Yugoslavia, President Lukashenko and certain other officials of Belarus who are responsible for violations of international electoral standards in the presidential elections in Belarus on March 19, 2006 and the crackdown on civil society and democratic opposition. (effective May 20, 2006, with the publication of Council Regulation (EC) No 765/2006,), and Zimbabwe. The restrictions on making funds or economic resources available and the requirement to freeze funds are the same as for the UN-based sanctions.



In addition to these financial sanctions, the financing of and financial assistance related to military activities in the Democratic Republic of the Congo, Côte d’Ivoire, the Islamic Republic of Iran, the Democratic People’s Republic of Korea, Liberia, Myanmar, Somalia, Sudan, Uzbekistan, and Zimbabwe are prohibited.
Other security restrictionsYes.
References to legal instruments and hyperlinkswww.bankofengland.co.uk/publications/financialsanctions/index.htm.
Exchange Arrangement
CurrencyThe currency of the United Kingdom is the pound sterling.
Other legal tenderGold sovereigns and britannias are legal tender, but do not circulate.
Exchange rate structureUnitary.
Classification
Independently floatingThe exchange rate of the pound sterling is determined on the basis of supply and demand in the foreign exchange market. However, the authorities may intervene at their discretion to moderate undue fluctuations in the exchange rate.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketBanks are allowed to engage in forward exchange transactions in any currency, and they may deal among themselves and with residents and nonresidents in foreign notes and coins at free market exchange rates.
References to legal instruments and hyperlinksFurther information is available by contacting HM Treasury at +44 (0)20 7270 4558 or public.enquiries@hm-treasury.gov.uk.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangements
Regional arrangementsThe United Kingdom is a member of the EU.
Administration of controlNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
On domestic ownership and/or tradeGold bullion and gold coins are not subject to controls. Gold coins have also been issued in Jersey and the Isle of Man and are legal tender there. Except under the authority of a license granted by the treasury, it is not permitted to melt down or break up any metal coin that is for the time being current in the United Kingdom or that, having been current there, has at any time after May 16, 1969, ceased to be so. There is a gold market in London in which gold bars are traded freely.
On external tradeThe exportation of gold in manufactured form more than 50 years old and valued at £8,000 or more for each item, or matching set of items, also requires a license from the Department of Culture, Media, and Sport.
Controls on exports and imports of banknotesNo.
References to legal instruments and hyperlinksHM Treasury at public.enquiries@hm-treasury.gov.uk.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
References to legal instruments and hyperlinksHM Treasury at public.enquiries@hm-treasury.gov.uk.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
References to legal instruments and hyperlinksHM Treasury at public.enquiries@hm-treasury.gov.uk.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Negative listImport restrictions are in effect for public safety reasons and to satisfy international obligations.
Open general licensesMost imports are admitted to the United Kingdom under an OGL.
Licenses with quotasTextile and clothing imports from the People’s Democratic Republic of Korea, Serbia, Montenegro, and Kosovo are restricted under the terms of autonomous arrangements; and textiles imports from China and Belarus, as well as imports of certain steel products from the Russian Federation, Ukraine, and Kazakhstan, are subject to EU bilateral agreements. There are EU prior surveillance licensing arrangements for imports of certain steel products from all sources except the EU. There is double control surveillance of imports of certain steel products from Romania, Moldova, and the former Yugoslav Republic of Macedonia and textiles from Uzbekistan. Imports of cars from Japan are also subject to quotas under a separate agreement (The Elements of Consensus) between the EU and the Japanese government. A few articles may be imported under OGLs (i.e., without limit as to quantity or value). EU controls apply on imports of certain textiles and clothing products from China.
Other nontariff measuresImports of cereals and cereal products, beef and veal, mutton and lamb, poultry meat, and dairy products other than butter and cheese are subject to minimum import prices enforced through autonomously imposed variable import levies. Imports of many other agricultural, horticultural, and livestock products are subject to EU regulations. Imports of rough diamonds are permitted only if accompanied by a Kimberley Process certificate that has been validated by the exporting government, and if secured within a tamper-resistant container with the original seals intact. The importation of antipersonnel mines is subject to a ban. Licensing requirements apply on the import of firearms and ammunition and nuclear materials.
Import taxes and/or tariffsYes.
State import monopolyNo.
References to legal instruments and hyperlinksHM Treasury at public.enquiries@hm-treasury.gov.uk.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesExports of certain products are controlled for reasons of national security, animal welfare, and national heritage, and in accordance with international agreements.
Without quotasExports of rough diamonds are permitted only if accompanied by a validated Kimberley Process certificate, and if secured within a tamper-resistant container with the original seals intact (EC Directive No. 2368/2002).
Export taxesNo.
References to legal instruments and hyperlinksHM Treasury at public.enquiries@hm-treasury.gov.uk.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
References to legal instruments and hyperlinksHM Treasury at public.enquiries@hm-treasury.gov.uk.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksHM Treasury at public.enquiries@hm-treasury.gov.uk.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsNo.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentUnder the Enterprise Act of 2002, ministers have certain powers to intervene in mergers that raise specified “public interest considerations.” To date, two public interest considerations have been specified: national security and plurality of the media. Under Section 58 of the Enterprise Act of 2002, ministers may add further public interest considerations subject to parliamentary approval. Use of the intervention powers means the competition authorities must consider the public interest issue identified by the minister in addition to the competition issues raised by the merger. Ministers are bound by the findings of the competition authorities on the competition issues raised by the case, but make decisions on whether the merger should be cleared, cleared subject to conditions, or blocked on the grounds of the specified public interest consideration. There are statutory timetables for considering the case and reaching decisions. These powers have not been used to date. In addition, controls apply to (1) investment in air transportation; (2) certain broadcasting licenses (including, in particular, commercial television, teletext, and radio licenses) other than by nationals of, or enterprises originating in, EU member countries; and (3) acquisition of U.K. flag vessels, except through an enterprise incorporated in the United Kingdom.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital transactionsNo.
References to legal instruments and hyperlinksHM Treasury at public.enquiries@hm-treasury.gov.uk.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutions
Open foreign exchange position limitsNet spot liabilities in foreign currencies (i.e., the net amount of foreign currency resources funding sterling assets) form part of a bank’s eligible liabilities that are subject to a 0.15% non-interest-bearing deposit requirement with the Bank of England. The level of the required deposit is based on the average of reported eligible liabilities over a six-month period in excess of the equivalent of £500 million. This rule applies to building societies as well as to banks.
Provisions specific to institutional investors
Pension fundsn.a.
Investment firms and collective investment fundsn.a.
References to legal instruments and hyperlinksHM Treasury at public.enquiries@hm-treasury.gov.uk.
Changes during 2006
Exchange measuresMay 20. With the publication of Council Regulation (EC) No 765/2006, financial sanctions went into effect against President Lukashenko and certain other officials of Belarus who are responsible for violations of international electoral standards in the presidential elections in Belarus on March 19, 2006, and the crackdown on civil society and democratic opposition.
Changes during 2007
Exchange measuresFebruary 27. The authorities informed the IMF of certain financial sanctions imposed against certain countries, individuals, and entities, in accordance with relevant UN Security Council resolutions and EU regulations.

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