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CONFIDENTIAL
CYPHER/CAT A
PRIORITY FOREIGN AND COMMONWEALTH OFFICE
TO HONG KONG
TELEGRAM NO 335
19 MAY, 1969 (U F.P.A.D.)
CONFIDENTIAL
ADDRESSED TO HONG KONG TEL NO 335 OF 19 MAY REPTD FOR INFMN TO KUAL A LUMPUR (FOR FOGARTY)
YOUR TELS 405 AND 406
STERLING AGREEMENT.
WE ARE CONSIDERING URGENTLY YOUR TELS UNDER REFERENCE AND WILL SEND AS SOON AS POSSIBLE A LIST OF POINTS WHICH SEEM NECESSARY IN THE LIGHT OF THESE (SEE ALSO PARA 3 OF OUR TEL NO 329).
2. HOWEVER OUR IMMEDIATE COMMENT ON YOUR TEL 405 IS THAT WE SEE NO CASE FOR AN INCREASE IN THE NON-STERLING HOLDINGS OF THE AUTHORISED
AND AS BELL POINTED OUT, BANKS ABOVE THEIR PRESENT WORKING LEVELS.
OUR CONCERN IS NOT REPEAT NOT TO LIMIT OUR GUARANTEE ON GENUINE HONG KONG STERLING BUT TO ENSURE THAT OUR GUARANTEE LIABILITY TO HONG KONG SHOULD COVER ONLY GENUINE HONG KONG DOLLAR TRANSACTIONS AND THAT THE STERLING COUNTERPART OF NON-HONGKONG RESIDENTS' TRANSACTIONS SHOULD BE EXCLUDED. IF THE EXCHANGE FUND BORROWING LIMIT IS REACHED AND YOU FIND IT NECESSARY TO GIVE AN EXPLANATION TO THE PARTICIPATING BANKS WE HOPE THAT YOU WILL EXPLAIN OUR POSITION.
STEWART
FILES
F.P. & A.D.
HONG KONG DEPT.
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