SECRET
INWARD TELEGRAM
TO THE COMMONWEALTH OFFICE
(The Secretary of State)
FROM HONG KONG (Sir D. Trench)
(89)
Cypher
D. 19 May 1967
PRIORITY
R. 19 tt
康
1230Z
SECRET
No.649
20
30
Orijinal a Fl7/200/1
Banking Situation.
Further to paragraph 4 of my telegram No.632.
80
Since yesterday withdrawals have continued but not too excessively except at Sheung Shiu (N.T.) branch of Hong Kong and Shanghai Banking Corporation which experienced a run due to deliberate rumours that bank was running out of cash and invasion scare. Story was played up by a Left-wing evening newspaper and repeated this morning by other Left-wing papers but not by majority of other papers. Statement issued over radio at midday to effect that rumours were unfounded appears to have had calming effect though withdrawals are continuing but at a slightly reduced rate. Bank note issue has been expanded by a further £7 million since yesterday. All banks are orderly and since this morning there have been no queues. U.S. dollars T.T. price has risen further to dollars 5.94 and gold to dollars 280 per tael.
40 Unissued reserves of notes in the Colony amount to about dollars 300 million and another dollars 400 million will be arriving over the weekend. This will leave a reserve in the U.K. of about dollars 450 million.
5. If the situation deteriorates further however we might wish to make Bank of England notes legal tender as was done in February 1965 and I should be grateful if the Bank could be forewarned of the possibility that they may be asked to supply us with sterling notes for use in Hong Kong. I consider this possibility remote at present but situation could change.
60
Legislation to limit the amounts of payments in cash from the banks has been drafted and is being kept in readiness but present indications are that it is unlikely to be needed.
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