British Gold Reserve Tapped: The British government...

British Gold Reserve Tapped: The British government used up 5% of Britain’s gold and foreign currency reserves last month in its attempt to prevent the pound’s weakness from turning into a full-scale sterling crisis. Figures released by the British Treasury showed that the underlying level of the reserves fell by $2.236 billion in June--the biggest drop ever and an indication of the scale of the Bank of England’s intervention in the foreign exchanges. With inflation already running at above 8%, the government was forced to act, since a lower pound leads to more expensive imports and eventually higher prices.