CYPHER/CAT A
PRIORITY HONG KONG
TELEGRAM NUMBER 396
}
CONFIDENTIAL
TO FOREIGN AND COMMONWEALTH OFFICE
16 MAY 1969.
CONFIDENTIAL
(314)
YOUR TELEGRAM 16321: EXCHANGE FUND AND STERLING GURANTEES.
THE FURTHER COMMUNICATION PROMISED IN YOUR PARGRAPH 2 HAS NOT BEEN
RECEIVED BUT I MUST NOW REPORT THAT BORROWING BY THE EXCHANGE
FUND UNDER OUR EXCHANGE GUARANTEE ARRANGEMENTS HAS NOW REACHED.
HONGKONG DOLLARS 2,992 MILLION AGAINST THE PRESENT LIMIT OF 3,000
MILLION. ALL BANKS OF ANY CONSEQUENCE ARE NOW PARTICIPATING IN THE
SCHEME EXCEPT THE CHINESE COMMUNIST BANKS, WHICH, IF THEY DO COME IN,
ARE LIKELY TO DO SO FOR RELATIVELY SMALL AMOUNTS. BUT THE CONTINUING
BUOYANCY OF OUR ECONOMY IS PRODUCING A STEADY INCREASE IN THE
EXCHANGE RESERVES OF THE COMMERCIAL BANKS AND THE FUND'S BORROWING
LIMIT MAY SOON BE REACHED. I CONSIDER THAT IT IS NECESSARY TO
INCREASE THE LIMIT TO 3,500 MILLION AT LEAST, BUT PREFERABLY TO
4,090 MILLION, IF THE LEGAL COMPLICATIONS YOU HAVE REFERRED TO
CONTINUE TO STAND IN THE WAY OF PROVIDING FOR AMENDMENT BY
RESOLUTION OF LEGISLATIVE COUNCIL. I SHOULD BE GRATEFUL FOR YOUR
CONSENT.
CONFIDENTIAL
/2.
A SITUATION
RECEIVED IN RIGUTA
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