SECRET
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that they had been examining the legal right of HMG to direct
the Hong Kong Government and had concluded that there would
be such a right in respect of the official reserves. I made
it clear to Mr Barratt that any such proposal would have to
go to Cabinet.) All this leads Sir Murray to suspect that the
Treasury may be thinking in terms of use of the reserve powers.
which he would regard as calamitous.
7. It was made clear that, if no satisfactory proposal was
made, the Hong Kong Government could not control the action of
the Banks (who hold some £300 million of the Colony's total
of about £700 million sterling holdings).
8. There was a good deal of discussion about figures and variom
matters marginal to the basic disagreement. It was arranged
that Mr Haddon-Cave would meet Mrs Hedley-Miller on 10 August
to discuss these detailed matters further, and Mr Nott said
he would welcome anything Mr Haddon-Cave felt able to say at
that meeting about the sort of arrangements which the Hong Kong
Government might find acceptable after the sterling agreement
Lapsed. It may be that this discussion will throw a little
more light on the Treasury's thinking and Mr Haddon-Cave inLooda
to try to steer it that way.
10 August 1973
Copies to:
P3 to Mr Royle
Sir Thomes Brimelow Sir Duncan Watson
Mr Wilford
Mr Crowson
SECRET
Eric Norris