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had already been allowed some diversification.
It might well be
that they were already holding about the same amount of sterling
as they would be even without an agreement.
This should decrease
Mr Stuart
their anxiety about the position after 25 September.
said he was not clear how far the banks were covered by the new
arrangements. Mr Holland said they were covered by HMG's
Declaration in the same way as before the definition of official
balances remained unchanged. Sir D Watson thought it would be
useful to have an early reaction from Hong Kong to the Declaration.
5. Sir M MacLehose said that if he saw Treasury officials he
would say that Hong Kong's main requirement would be to seek a
reduction in MSP. Mr Royle asked Sir M MacLehose if, after seeing
the Treasury, he would do him a note on the situation setting out
what he would like the FCO to do. We would assist with the
Treasury if we could but we could not hold out great hopes.
Mr Holland said it was important not to try to rush the Treasury.
it was also important to avoid publicity. If the possibility of
special arrangements for Hong Kong was made public, other sterling
holders might well seek them too. Mr Marshall saw two separate
exercises: Mr Haddon-Cave should talk to the Chancellor in Nairobi
and Dar-es-Salaam about the longer term implications.
Meanwhile,
if any essential action had to be taken before 24 September, that
could be pursued now. We should ask Hong Kong to look at the
Declaration in the light of the latter point.
6.
Sir M MacLehose asked whether the Declaration had to be
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/accepted