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excess of the agreed limits". Certainly we approve of
the general exclusion but, if we understand you aright,
we do not see why even small amounts of such balances
which do not originate in Hong Kong should be brought
into the scheme, and we hope that it will be possible to
exclude any such balances. The considerations which
apply to the balances of Hong Kong banks apply equally,
of course, to the counterpart of private non-Hong Kong
residents' balances and we would therefore like to see
steps taken to exclude these also.
7. This is primarily an Exchange Control matter; WO
have often discussed problems of Exchange Control in
Hong Kong, and I do not need to repeat our views, except
to say that we do not underestimate the difficulties of
policing the detailed arrangements laid down in your
letter.
8. There is one more point which also arises from our
general concern to institute effective controls. This
relates to the machinery for reporting, both to you and
to us, by the commercial banks of the balances of
official sterling which they hold under the arrangements.
As is laid down in paragraph 8 of the Secret Dispatch
of 20th September last year, the Bank of England needs
to receive each month a statement from each bank in
Hong Kong holding a deposit of official sterling, as is
also the case with banks in London holding such deposits.
I see that in your letter of 29th January you do not
appear to have required such advices. Although we
understand that the Bank of England are receiving these
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/advices