CONFIDENTIAL
Hong Kong Sterling Discussiong
Record of a meeting held in Room 11 Second Floor. Treasury Chambers. 11.00 a.. on Friday 30th May. 1969
2
Present:
Mr. G. R. Bell (In the Chair)
Mr. A. Mackay
Mr. J. A. Marshall
Mr. R. Hay
Mr. N. A. Nagler (Secretary)
8ir A. Snelling
Mr. T. J. O'Brien
H.M. Treasury
}
F.C.O.
Kr. R. Fenton
Mr. R. H. Turner
}
Bank of England
Sir J. Cowperthwaite
34
Mr. Paterson
> Financial Secretary Hong Kong
) Exchange Controller, Hong Kong
Mr. Bell began by summarising the position of Hong Kong as he
understood it from the previous day's meeting. In particular, he
recalled the various arguments advanced by Sir. J. Cowperthwaite: that
the increase in commercial bank balances could be adequately explained
by Hong Kong's export boom, and that there was no evidence of a
"hot money" inflow; that in any case non-residents with deposits in
Hong Kong could not obtain a guarantee but merely the advantage of
holding a strong currency; that the effect of the Hong Kong
arrangements could not be to increase the United Kingdom's guarantee
liability except to the extent that funds might move from the
United Kingdom; that it would be impossible to identify the sterling
counterpart of non-resident deposits, and thus to exclude from the
United Kingdom's guarantee liability an amount of sterling representing non-resident deposits; and that there seemed no reason to limit the
scope of the United Kingdom's guarantee to Hong Kong when no limit was
placed on the amount of sterling taken in by central banks in other
O.S.A. countries.
While we accepted that these arguments had some force,
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CONFIDENTIAL
RECEIVED IN
REGISTRY N
21 JUL 1969
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