STERLING
CONFIDENTIAL
hincinéti
to 41L?
#IG
Cook place
Following floating of the pound consultations were undertaken
with the Sterling Agreement countries about implementation of
the Agreements under floating and about possible extension
beyond September 1973; these have now been completed. While
some governments, including Hong Kong, were anxious to conclude
a new Agreement, others were not. Accordingly, the Chancellor
Rad
recently
written
will shortly be writing to his fellow Finance Ministers suggesting
nisters/suggesting
that, on the balance of views, we should leave things as they are
until next year when the situation is expected to be somewhat
clearer
(ii)
On implementation the message will say that as the
contingency has not arisen it would perhaps be
sufficient for the time being to leave present arrange-
ments as they are on the understanding that there would
be rapid joint consultation should the need arise.
(The rate has to drop below $2.376 (ie 1% below the
$2.40 guarantee level) for 30 consecutive days for
the guarantee to operate, and there will thus be time
for such consultations.)
Deliberately, nothing said about compensation,
which a number of Sterling Agreement holders have
asked for on the basis of losses since sterling was
allowed to float downwards from the December 1971
level of $2.60. If this is raised the Secretary of
State might say that the agreement was to guarantee
sterling at its then parity of $2.40 and that the
/guarantee
1. CONFIDENTIAL