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diversify. They would use such discretion as any prudent sterling
holder would. If they were not given some freedom and they
suffered losses, these losses would be held to be the fault of HMG.
This would not be the case if Hong Kong had freedom to make their
own mistakes.
All major holders of sterling had much lower MSPs
than had Hong Kong. This anomaly should be put right. The rate
of 2.4213 seemed reasonable, provided there was no devaluation of
the US dollar. Mr Royle pointed out that Mr Haddon-Cave would be
seeing the Chancellor at Dar-es-Salaam and Nairobi and could put
Hong Kong's views in the margin of the Conferences. Meanwhile
perhaps Sir Murray would like to see the Treasury. Sir M MacLehose
said he would indeed like to do so, but he thought he need not
trouble a Treasury Minister this time.
3. Mr Marshall and Mr Holland said that the Declaration would be
telegraphed to Hong Kong today. it answered some of Mr Haddon-Cave's
questions. The Treasury would like to see what the general reaction
of sterling holders as a whole was before tackling individual
countries' problems.
4. There was then some discussion on the position of the Hong
Kong banks. Mr Holland pointed out that HMG were not a party to
the agreement between the Hong Kong Government and their banks.
Sir M MacLehose observed, however, that HMG had a strong interest
in that agreement because it was the only hold the Hong Kong
Government had on where the banks kept their reserves.
no exchange control in Hong Kong. Mr Holland said that the banks
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/had